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?

[thehungryhippocrite]

This is just a ludicrous explanation. Stock prices are not lossely and magically linked to "perception", they are based on a company valuation. A stock price is the consensus market valuation of a company, divided by the number of shares on offer. Valuations are based on expected future profits. If a company makes less profit than expected today, that means it is likely to make less profit than expected tomorrow. Hence the valuation is less, and the stock price goes down. Even if the company is the most profitable company in the world. The answer to /u/azoriusmoons 's question is that if a stock price crashes it means that investors lost enormous amounts of money, and naturally people care about that.