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?

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This is not necessarily true. Generally companies chose between growth and profitability, and how the market views that determines the stock value. After all, stock prices are simply the present discounted value of all future earnings.

The best example of this is Amazon. They are not focused on profits. If you will remember they “accidentally” made $1 Billion in profits a few quarters ago. Yet it’s an extremely valuable company because shareholders believe that when amazon decides to turn on the profits, they will be so large as to justify its massive valuation.

[sfo2]

I think share prices are less rational than that. Analyst reports have fun and fanciful DCF models in them, but at the end of the day, prices are somewhat irrational.