For the second quarter, Oracle posted adjusted earnings per share of $2.26, beating out the consensus target of $1.64. In addition, this figure represented growth of 54% against the year-ago period. While that was encouraging, investors took a dim view of the top line, where the software firm generated only $16.06 billion, thereby missing analysts' estimate of $16.21 billion.
Of course, one of the fundamental explanations for ORCL stock plunging more than 15% in the trailing five sessions is due to the revenue miss, and the underlying implications regarding the supposed AI bubble. However, markets don't move on a single, clean causal chain. While publicly traded assets are plotted as functions of time, they're actually functions of state.
The key issue, though, is that nobody knows what that state is. Not to go too deep down the rabbit hole but even if it were possible to calculate the true causal state, the collective knowledge of that insight would represent a form of Schrödinger’s paradox: observation would effectively alter reality.
In a similar vein, George Soros popularized the concept of reflexivity in the financial markets. To make a long story short, investor perceptions can alter a publicly traded enterprise's reality through valuation spikes, and the subsequent change in price further reinforces perceptions, thus creating a feedback loop.
Again, while it's likely impossible to know the source of reflexivity, we can calculate the magnitude of its ...
