Earlier this month we showed that a company's profit warning record predicts its next warning. We ended with an open question: does the share price already reflect that record? On UK data from 2023 to 2025, it mostly doesn't.
The clearest case is the reassurance. A company that has warned twice in two years and then says it is "in line with expectations" is followed by another warning within six months 19% of the time, against 6% for a company with a clean record. Yet on the day of the statement its shares do no worse than those of similar companies.
"In line" from a repeat warner is taken at face value
We measured the share price on the day of 5,307 "in line" or "guidance unchanged" statements, and over the six months that followed, against similar companies that made no guidance statement around the same time. A positive figure means the shares did better than those companies.
| Company's record in the previous two years | Statements | Share price on the day vs similar companies | Next six months vs similar companies |
|---|---|---|---|
| No warnings | 3,941 | +0.4% | −1.1% |
| One warning | 965 | +0.7% | −0.3% |
| Two or more warnings | 401 | +1.0% | −4.9% |
A one-in-five chance of a warning that typically costs 13% (see below) is worth roughly 2.5% off the share price before anything happens. The market charged nothing for it on the day. The cost turned up over the following six months instead, when shares of repeat warners trailed those of clean-record companies by about four percentage points. That gap is the right size, but on 401 statements from 120 companies it is too small to be sure it's real: the likely range runs from about nine percentage points worse to one and a half better.
A second warning lands almost as hard as a first
If the market learned from the record, a second warning should do less damage than a first. It was also more predictable: 28% of first-time warners warn again within a year. The shares have usually fallen further already, too: in the six months before a second warning they had trailed the index by 19%, against 8% before a first. We compared 484 warnings that traded on the day with up to five similar companies from the same market that hadn't warned.
| Warning number (within twelve months) | Warnings | Companies | Fall on the day vs similar companies | Likely range |
|---|---|---|---|---|
| First | 332 | 300 | 13.9% | 12.5% to 15.2% |
| Second | 119 | 101 | 12.8% | 10.6% to 15.1% |
A second warning took about one percentage point less off the share price than a first, which is too small to be sure it's real. Third and later warnings fell by a similar amount, though there are only 33 of them. Second warnings were also more often described as "materially below" expectations (14% against 8%). Allowing for that, and for the company's size, recent share price and how often its shares trade, the difference grows to about two percentage points. Across a wider set of 684 warnings from September 2022 to October 2026, later warnings also fell about two percentage points less than first ones.
So the record buys a discount of perhaps two percentage points on a fall of 13% to 14%. The rest of the second warning is treated as news.
Most of the slide after a first warning comes from the next warning
Shares kept underperforming after a first warning: over the following year, first-time warners trailed similar companies by 9% (likely range 2% to 16%). A slide like that is often read as the market being slow to digest bad news.
Our data points to a more specific cause. We split the first warnings by what happened next, which an investor couldn't have known at the time. The 28% of companies that warned again within a year trailed similar companies by 22% over that year. The other 72% trailed by 4%, too small to be sure it's real. Most of the year-long slide is the follow-up warnings arriving, each taking about 13% off on the day.
Second warnings split the same way: companies that warned a third time within a year trailed by 18%, and those that didn't ended roughly level with similar companies. That links the two pieces. The record predicts the next warning, and the next warning is what moves the price, but the price doesn't move in advance. After a second warning we found no bigger slide: over the following year the shares trailed similar companies by about 5%, with a likely range wide enough to include no effect.
What this means for investors
On this evidence a company's warning record is information the share price does not carry. It has to be read separately. These are the things it changes:
- How much weight an "in line" statement can bear. From a company with two or more warnings in two years, it has been followed by a warning within six months about one time in five, and the share price on the day hasn't reflected that.
- What the year after a first warning tends to hinge on. In our data the size of the slide depended mostly on whether the company warned again. Our earlier piece found the typical gap to a second warning was about five months, roughly one reporting cycle.
- How a second warning is likely to be received. It has been treated almost as fresh news, not as something already in the price.
We are adding each company's guidance track record to Ticker's company pages: how often it has warned, how often its reassurances held, and how long since its last warning. We will rerun this analysis in 2027, when there are more second and third warnings to measure.
Sources and data
- Warnings: the 496 profit warnings from 325 companies, January 2023 to September 2025, from Do profit warnings come in threes?, with the same definition and exclusions (investment trusts, VCTs, ETFs and bond-only issuers left out; warnings within 30 days merged). Data as at 16 October 2026. Rates of follow-up warnings are from that piece.
- Prices: daily share prices from Ticker's market data to 13 October 2026, adjusted for share consolidations and splits. Days with no trades are excluded. 484 warnings from 316 companies, and 5,307 reassuring statements, traded on the day.
- Similar companies: for each warning or statement, up to five companies drawn at random from the same market (AIM or Main Market) with no warning in the previous twelve months and no guidance statement within ten days. A check matching on trading volume as well gave the same picture.
- Measures: the day's move is the close on the announcement day against the previous close. Later returns run from that close for six months (126 trading days) and twelve months (252), against similar companies; the index comparison uses the FTSE AIM All-Share or FTSE All-Share. Returns exclude dividends. Companies that went into administration count as a 100% loss; other companies that left the market are valued at their last traded price. Extreme values are capped at the 1st and 99th percentiles.
- Likely ranges: 95% confidence intervals from a bootstrap that resamples companies rather than individual events.
- Severity: a warning counts as "materially below" when the company's own wording says so.
- Checks: merging warnings up to 60 days apart gives the same picture, as does counting every company that left the market other than by takeover as a 100% loss.
This article is for information only and is not investment advice. Ticker does not recommend any security. Do your own research or speak to a regulated adviser.
