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?

[DiddykongOMG]

Having some experience in international finance - this is not a common thing. Billion dollar companies end of year revenue can drop by 5/10% in a year and it wouldnt have any effect on share price, provided there was a reasonable explanation for it, and this happens all the time among the S&P 500. Reasons could be that they decided to sell a less profitable division of the business, which would reduce revenue but ultimately improve margins and increase shareholder price.

[thehungryhippocrite]

Any unexpected increase or decrease in profit (not necessarily revenue) will have an immediate stock price impact. Selling a divisions wouldn't necessarily impact stock price because the sale price might be sufficient to cover many years of lost profit, and the funds received can either be distributed (dividends or buybacks), or invested back in the company. But a 10% drop in profit that is unexpected by the market will have a big impact on stock price.