What is a Whisper Number?

The unofficial, unpublished, and rumored earnings per share (EPS) projections of Wall Street fund managers and professional traders are called whisper numbers. The whisper number may also be used in any news or data release market.

A herd of individual investors’ projected future profits or sales may also be called a whisper figure. In this way, a website polling its users may generate a whisper number. The whisper figure is essentially the unofficial consensus regarding a company’s expected profits and sales at the next release.

Knowing Your Whisper Number

Analyst expectations form the basis of earnings predictions. Forecasters like to cluster their forecasts together so they won’t be caught off guard when they make wildly inaccurate predictions. Although projections from consensus may be very accurate, the whisper number refers to the thoughts of analysts, traders, and fund managers that they are afraid to share for fear of being singled out if they are shown to be incorrect. Maintaining one’s analyst career by following the crowd is a wise move. You can lose your job if you deviate from correcting too many incorrect decisions. It might be valuable when whisper data deviates from analysts’ consensus estimates. They are a helpful tool for identifying (or preventing) an unexpected (or disappointing) profit decline. This is only significant if their estimate proves more correct than the consensus. Nobody can tell if the consensus prediction or the whisper number is more accurate until the announcement.

Numbers in whispers may be off. People could purchase stock before the results announcement if the whisper number is much higher than the consensus expectation. Even if real profits surpass the whisper figure but fall short of the consensus, the stock may drop if it does. Regardless of the agreement, the stock is expected to appreciate if the firm releases profits exceeding the whisper estimate. Stated differently, stock prices usually respond to earnings about the whisper number since it is what traders are likely acting upon and what they think.

Myths And Concerns Regarding Whisper Numbers

Compared to investors in the past, individual investors have access to a plethora of accurate and inaccurate information. The whisper number was formerly the finest information brokers could provide to their wealthiest customers. The brokers would not disclose what the firm’s analysts believed or understood to the public but would whisper it to these customers.

Obtaining a whisper number in this conventional sense became much more difficult due to the heightened regulatory inspection of the brokerage sector. Sarbanes-Oxley, for instance, established more stringent guidelines for how businesses must provide financial information. If employees, financial advisors, or brokerages provide insider profit information to a particular set of individuals, they might be subject to severe fines.

There has been significant questioning about whether brokers’ high-net-worth clients received whisper numbers. Some brokers have attempted to disprove the idea as a whole.

Many websites now promote whisper figures based on individual judgments and views rather than broker input. Traders may even infer the whisper from the conversations they overhear on social media.

When projecting profits, a whisper figure could be a more precise prediction than consensus projections. Whisper numbers are still not always more reliable as a prediction because of this. It does assist in understanding why, on occasion, stock prices respond strangely to earnings disclosures compared to consensus expectations.

A Whisper Number Example

Let’s say that $5 per share is Apple Inc.’s (AAPL) expected profit for the quarter.

In reality, traders predict more significant profits, close to $6 per share. Price prices in the $6 EPS due to the cost being driven ahead of the results.

The price mainly reflects the $6 figure going into the results, although some may be shocked if the firm releases $6 EPS, and the stock may go higher or lower.

The stock rises if the profits are shown to be $7, surprising almost everyone. The stock will probably sell down if the EPS is $5, which aligns with the consensus estimate but is lower than the whisper figure.

However, other factors affect the stock price more than the whisper number. The stock may sell off if the EPS beats the whisper estimate, but stock index futures have dropped that day. It is also difficult to gauge the number of individuals utilizing the whisper number before earnings, making it challenging to forecast the public’s response to the official figure’s announcement.

Conclusion

• The unofficial estimate of the size of a news release is known as the whisper number.
• There are instances where this deviates from the publicly released expert projections.
• Since traders base their decisions and actions on what they think and have acted upon, market prices often move around the whisper number.