Early Insights into Management Sentiment Trends during 4Q 2022 Earnings Cycle Show Continued Decline
16 February 2023 | Admin
AI-aided analysis of the 4Q 2022 earnings call transcripts available to date offers early insight into GCC corporate and investor sentiment trends.
The overall management sentiment during 4Q 2022 earnings calls hosted by GCC companies so far has shown signs of continued decline, according to a new analysis by Iridium Advisors. After having dropped by 12% quarter-on-quarter in 3Q 2022, the Iridium GCC Earnings Call Sentiment Index continued on its downward trend, dipping a further 6% in the most recent quarter.
The trend in sentiment continues to broadly track the MSCI GCC Index, which also declined over the final quarter of last year. Iridium Advisors’ analysis shows that of the 30 companies that have held their earnings calls so far, 45% failed to meet analyst expectations. However, encouragingly, 55% of these organisations surpassed analysts’ forecasts.
Interestingly, whereas after 3Q 2022, sentiment during the management presentation portion of earnings calls declined, and sentiment during the subsequent Q&A session with investors and analysts improved, in 4Q 2022 the trend was reversed with sentiment during management presentations increasing, but dropping during the follow-up Q&A sessions.
Oliver Schutzmann, CEO, Iridium Advisors, said, “As part of our work in helping our clients communicate more effectively with the investor community, we have developed powerful AI tools that generate unbiased insights from the sentiment expressed by management, analysts and investors. Given that we have consistently seen that sentiment – a measure of language positivity versus negativity – correlates strongly with equity market performance, it is a metric that businesses and market participants need to start paying close attention to.”
“While sentiment overall still remains positive, the sentiment based on the first 30 earnings calls this quarter indicates a further decline. It will be interesting to see if this trend holds up as more listed companies host their earnings calls in the coming weeks. This is something that Iridium Advisors will be tracking very closely, and we will be highlighting the implications of these findings in our full report available in early March,” added Schutzmann.