As an Investor, Do You Really Have To Listen to Quarterly Earnings Calls?

Quarterly earnings calls have long been one of Wall Street’s driest rituals—hours of executives offering pablum about “executing on our strategic initiatives” and “driving operational excellence” before they field questions from analysts. Researchers have even studied whether there’s a method to CEO mumbling and the lousy dad jokes company managers fruitlessly offer to break up the general tedium. One thing all agree on: they’re boring.

So do you have to listen to them? While these quarterly forums often dive into numbing technical details, modern tools make it easy to zero in on the key intel you need. In addition, earnings calls have at times broken away from the dullness they’re known for: Nvidia Corp. (NVDA) investors have packed watch parties that rival those for sporting events, and there’s a growing list of CEOs berating analysts in heated exchanges.

Here’s what you need to know about making the most of earnings calls—without surrendering hours of your time.

Key Takeaways

• Earnings calls provide important context and forward-looking information not available in written reports alone.
• Management’s tone and confidence can reveal crucial insights about performance and prospects.
• Individual investors often get better value from reading call summaries and expert analysis than listening to full calls.

Smart Ways To Track Earnings Calls

You can now skip the live calls entirely using these tools:

• Earnings call transcripts: Many services online offer free transcripts shortly after calls end. You can search the transcripts for “guidance,” “outlook,” “challenges,” or other topics you’re tracking.
• Expert analysis: For larger firms, the financial media typically publish key takeaways within hours, highlighting the most important revelations.

What Really Matters in These Calls?

The most revealing parts aren’t about the raw numbers—they’re provided in PDFs anyway—but from how executives present them. You don’t need an accounting license to spot the following:

• Changes in key metrics: When companies suddenly stop highlighting previously important performance measures or shift to new ones, this often signals problems. For example, in 2021, Meta Platforms Inc. (META) pivoted from discussing user growth metrics to measures of metaverse investments. Then, in another shift in 2023, Meta wasn’t discussing the metaverse at all, as losses had mounted into the tens of billions.
• Forward guidance: Listen for whether they narrow ranges, become more conservative, or drop, giving specific projections entirely.
• Q&A session: This is generally where the most action is. Sharp or defensive responses can reveal the company’s pressure points.
• Strategic shifts: You’ll need to read between the lines when the topic turns to changes in the market, new initiatives, or competitive pressures. You won’t hear “our core business is tanking”—instead, executives speak about “challenging market conditions” (i.e., sales are down) or “streamlining operations” (i.e., layoffs are coming).

Infamous Earnings Calls

The most notorious earnings calls might be from March and June 2008. In the March call, Lehman Brothers‘ CFO used “great” 14 times while assuring investors amid the growing subprime mortgage crisis that it would barely impact the firm’s earnings. Three months later, after another $2.8 billion in losses, she returned to insist the firm’s business was strong. The CFO was fired a month later, and by September, the once high-flying investment bank was out of business.

How Do Earnings Calls Affect the Market?

Earnings calls can trigger significant market moves, often in unexpected ways. A company might report strong numbers but see its stock decline if executives sounded uncertain during the Q&A. Meanwhile, investors might overlook mediocre results if management convincingly explains its strategy for addressing challenges.

Consider Nvidia’s recent earnings calls—they’ve become market events that rival major U.S. Federal Reserve announcements in financial media coverage, potentially triggering stock values shooting up or down by hundreds of billions.

The Bottom Line

While you don’t need to clear your calendar for every earnings call, these quarterly check-ins offer valuable information on your investments. The good news? You can skip the live event and still get what matters through transcripts, media summaries, and analyst reports.