u/the_axe_effect ·
Reddit — r/ValueInvesting
· August 21, 2026 at 01:49
· ⬆ 16 pts
· 💬 39 comments
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AI Summary
Summary
Author asks a conceptual market mechanics question: who buys stocks during an immediate post-earnings drop?
Thesis: no rational investor should buy at 4:30 PM without reading the report, so they would instead wait for a 5-10% discount.
Quality assessment: Conceptual / educational speculation, not company-specific due diligence or a trade thesis.
Score16
Comments39
Upvote %79%
▶ Full Post Text
Okay this maybe a stupid question, but lets say a company reports bad earnings then the stock drops immediately after the earning report is released and this happens almost instantaneously.
For example if earnings are reported after end of business day the stock drops 5-10% immediately at 4:30 PM.
So I understand that hedge funds etc have systems in place to automatically sell stock once they receive the news but what I dont understand is who buys the stocks that they sell in this case.
Any rational investor would know that buying stock at 4:30 PM without looking at earning report is not good for them as the stock will drop after that news, if they really want to buy the stock they should wait for the stock to drop and then buy at a 5-10 % discount right?