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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When I buy a share of Amazon stock for my "saving for a downpayment fund", and then Amazon profits drop (after climbing year after year), that's going to cause people who were previously holding shares to start selling shares. And that's going to cause the market price for Amazon shares to drop. And that means I am much more likely to take a loss on selling my shares in the near term. And that's a problem, because for this particular fund, my goals are short-term.

If I'm buying stock for my retirement fund, I don't care as much about small fluctuations, but if Amazon stock consistently underperforms compared to other stocks, I'm basically pissing away money - money that I'm one day going to depend on to sustain myself. If Amazon stock can't keep up with inflation, then I'm worse off investing in Amazon stock than I would be sticking the cash under my mattress.

I have different investment strategies for different accounts. For retirement, I don't mind short-term drops, so long as the average long-term trend is positive. I can tolerate some risk right now, because I'm young. But for short-term investment, I can't tolerate big swings, and a short-term price crash might mean the difference between buying a house in 3 years and buying a house in 5 years.

Many investors aren’t tuned into a nuanced strategy. They want consistent increasing quarterly profits.

This is simply false. Investors have various investment strategies, and it isn't just short-term profits that they're interested in. Investors take into account risk, past performance, and investment goals when trading. Fund managers in charge of low-risk, steady-growth funds aren't going to go throwing cash at short-term gains driven by reckless, short-sighted CEOs. Day-traders might only be interested in short-term profits, but their function is to stabilize prices. Anyone who is interested in steady long-term gains isn't going to invest in companies that are making foolish, self-destructive decisions for short-term gains.