Post earnings announcement drift

Okay kiddo, do you know what companies are? They are big groups of people who work together to sell things or provide services. When people buy things from a company, they give them money, and the company keeps track of all the money they make and spend.

Now, four times a year, companies tell everybody how much money they made or lost during the past three months. This is called an "earnings announcement." When companies say they made a lot more money than people expected, their stock price usually goes up because investors are happy that they made more profit.

But a funny thing happens after these announcements. Even though people already heard the news and bought or sold the stock, the price keeps going up or down for a short period of time. This is called the "post earnings announcement drift." Basically, the stock price keeps moving in the same direction as the earnings announcement for anywhere from a week to several months.

This happens because investors and traders are slow to react to the news. It takes them a little while to figure out how good or bad the earnings announcement really was, so they keep buying or selling the stock until they think it's priced correctly.

So if a company announces better than expected earnings, you might notice their stock price keeps going up for a little while even though the news is already out. And if they announce worse than expected earnings, you might notice their stock price keeps going down for a little while too.