Reversion To The Mean With 3 Tech Earnings
After the close on Wednesday several technology firms reported earnings with vastly different stock reactions. In the tech world, earnings season tends to be a moment of wild swings. The stock reaction can be nothing more than expectations getting out of hand and investors turning too bearish or the result of a shift in the business fundamentals. Either way, the moves highlight the problems with investors getting too bullish or bearish as most stocks tend to eventually revert to the mean average.
In the after hours action, investors got a prime example of what happens when a market leader makes a move in one direction. The likelihood exists that the stock will revert to the mean eventually and no better time exists than an earnings report. This exact scenario occurred in the earnings reports for Akamai Technologies (AKAM), Equinix, Inc. (EQIX), and Fusion-io, Inc. (FIO) on Wednesday night.
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