Definition
A whisper number is an unofficial earnings forecast for a publicly traded company, often circulated among selected investors and professionals in the financial industry. It’s termed “whisper” because it’s not legally disclosed to the general public or published as the company’s projected earnings. Many times, the whisper number can be different from the official earnings estimates shared by analysts.
Key Takeaways
- Whisper Number is an unofficial and unpublished earnings forecast for a company, often circulated among professionals on Wall Street. These numbers usually come from insiders or traders who have studied the company closely.
- Due to their unofficial nature, Whisper Numbers can often differ greatly from the published consensus earnings forecasts, providing potentially valuable insight into market expectations. However, they are also less regulative which may increase the risk of inaccuracy.
- Whisper Numbers can influence market prices significantly. If the actual earnings are below the Whisper Number, it can cause the stock price to decrease. Alternatively, if the earnings beat the Whisper Number, there’s a potential for the stock price to increase.
Importance
The finance term “Whisper Number” is important because it provides a hint towards the expectation of financial analysts and insiders about a company’s earnings that might not have been formalized or publicized.
This mostly unofficial and unpublished estimate could potentially differ from the consensus earnings estimates.
The whisper number can sometimes be more accurate than the public estimates because it often derives from insiders who have a deeper knowledge of the company’s current situations.
In essence, the whisper number can be a useful tool for investors to predict surprises in the earnings report, hence helping in better investment decision making.
Explanation
The purpose of a whisper number comes into play prior to a publicly-traded company’s quarterly earnings announcements. The whisper number provides insight into the expectations that a select group of individuals — typically, but not exclusively, portfolio managers, investment analysts, and traders — have about a company’s earnings that may differ from the consensus earnings estimates. Importively, these expectations are thought to be based on more informed and detailed analyses, private information, and speculation that go beyond the publicly available consensus forecasts.
Hence, the “whisper number” can be a valuable tool for investors looking to gauge the potential reaction of the market to the company’s earnings report. Whisper numbers are used as a litmus test, a supplemental piece of information, for setting or adjusting investment expectations and strategies. If a company’s reported earnings exceed both the consensus estimate and the whisper number, it can spark a bigger positive reaction in the market than if it just beat the consensus estimate.
Conversely, a miss, even if it beats consensus but falls short of the whisper number, can drive a negative response. Therefore, whisper numbers are crucial as they can influence short-term trading decisions around earnings season, as they can help inform investors about the market sentiment towards a company’s upcoming earnings report. However, it’s important to approach whisper numbers with caution because they are unofficial and can be inaccurate.
Examples of Whisper Number
Whisper numbers are unofficial and unpublished earnings estimates that circulate among professionals on Wall Street. Here are a few real-world examples:**Apple Inc. in 2017:** Leading up to Apple Inc.’s third quarter earnings report in 2017, the consensus estimate for earnings per share (EPS) was pegged at $However, the whisper number was higher at $When actual earnings came out at $
67 per share, matching the official consensus but missing the whisper number, the stock initially fell as investors were expecting more.**Amazon in 2018:** Before Amazon’s Q1 2018 earnings report, the Wall Street consensus estimated EPS of $26, while the whisper number suggested a much higher EPS of $When Amazon smashed both expectations with an actual EPS of $
27, the stock price surged, reflecting the importance of the whisper number in investor sentiment.**Netflix in 2019:** Prior to Netflix’s Q3 report in 2019, the consensus expected the addition of7 million new subscribers. However, the whisper number was set at around5 million new subscribers. When the actual report revealed that Netflix had added
8 million subscribers, slightly above consensus but significantly above the whisper number, the stock value experienced mixed reactions as the company had just managed to exceed the official expectations but failed to surpass significantly lower whisper estimates.
FAQs about Whisper Number
What is a Whisper Number?
A whisper number refers to the unofficial and unpublished earnings per share (EPS) forecasts that circulate among professionals on Wall Street. It’s a type of estimate made about a company’s earnings by the investment community, typically circulated by word of mouth.
How is a Whisper Number generated?
Whisper numbers are derived from averaging the estimates of a select group of analysts, fund managers, and traders. These estimates have often proved more accurate than the consensus earnings forecasts because they are often made by industry insiders with a deep understanding of the industries they cover.
Why is a Whisper Number important?
Whisper numbers can give investors an edge because they provide a hint of what the market expects from a company’s earnings report. If actual earnings differ greatly from the whisper number, it could trigger substantial stock price movement.
Can I trust a Whisper Number?
While whisper numbers can provide valuable insights, they should not be used in isolation. They are unofficial and can be biased, and thus, should always be used in conjunction with other analysis and proper due diligence.
Where can I find Whisper Numbers?
While whisper numbers are unofficial and thus less publicly available, some financial news outlets and investment websites do provide whisper numbers for various companies. It’s crucial to consider the reliability of the source when using such numbers.
Related Entrepreneurship Terms
- Earnings Estimate
- Consensus Forecast
- Corporate Guidance
- Beat the Street
- Financial Analyst
Sources for More Information
- Investopedia: A comprehensive and reliable website that provides various finance and investment terms definitions, including ‘Whisper Number’.
- The Motley Fool: This site offers a wide range of finance and investment advice, and it includes content discussing the concept of a ‘Whisper Number’.
- Forbes: One of the leading sources of business news and financial information, Forbes regularly features articles that can help explain finance terms like ‘Whisper Number’.
- Bloomberg: It provides financial news and market data, including discussions related to ‘Whisper Number’ in its market analysis reports.
