Profit Warning

A profit warning is an announcement by a company indicating that its earnings or profits will be lower than expected. Profit warnings are typically issued when a company anticipates that it will miss its financial targets due to factors like weaker sales, increased costs, or unfavorable market conditions. Profit warnings can significantly impact a company's stock price, often leading to declines as investors adjust their expectations based on the revised outlook.

Example

A retail company issues a profit warning, stating that its holiday sales were lower than expected due to decreased consumer spending, leading to a downward revision of its earnings forecast.