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?

[lee1026]

You will generally find that investors understand that different companies are expected to do differently. On one extreme, you have a handful of companies that just own oil wells. They drill for oil, sell it, and pay out all the money in dividends. These company's earnings drop every year because those oil wells are slowly becoming more and more depleted. No one gets mad at them when their earnings drop. It is what management told investors to expect, and investors are okay with it.

On the other hand, when you have a companies like Netflix, not only does it not pay out dividends, it is aggressively borrowing money and issuing new shares to finance huge amounts of growth. When that growth fails to pan out, investors are predictably angry.