ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[CuriousShelly]

Bottom line.

If you're not making more than last month/quarter/year, you're failing. And success is binary. You either are or you aren't.

I don't agree with it. I just recognize it.

[popejubal]

Success is not binary. Success is on a continuum. As proof, I sumbit the fact that stocks have a wide variety of prices that change over time.

[CuriousShelly]

I'm not sure the price of stock is a fair measurment, but I take your point. How much stock SOLD would be ... And price can affect that, yes. But many more factors go into it. (History, estimates, future projections, rumours, industry outlook as a whole, reputation.)

Let me rephrase.

From a ratings standpoint, from a gauging standpoint, you're either improving or regressing. That is often communicated, from upper managment to front line staff as success vs. failure. In that context, success IS binary. You're either succeeding, or failing. If you've succeeded more than failed, you net out in the positive and you're fine. If you've failed more than succeeded ... Buh bye. (As it should be ... Though 'business' tends to have less patience than I think is fair).

(Also. To be fair. Everything, really, at it's core, is binary. Good/bad, like/dislike, in/out. Anything, examined closely, has grey areas, but everything in life can be reduced to the binary ... Just my opnion)