Whisper Number - Explained
What is a Whisper Number?
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Table of ContentsWhat is a Whisper Number?How is a Whisper Number Used?What is the Effect of the Whisper Number?
What is a Whisper Number?
A whisper number is the unofficial projections made by financial analysts regarding a company’s financial performance (earnings report) for a given period.
It is generally not publicly communicated; rather, it is communicated “whispered” to select customers (large or institutional investors) of financial analysts.
There may be more than one whisper number circulating at any point in time.
Back to:BUSINESS & PERSONAL FINANCE
How is a Whisper Number Used?
A Whisper Number is relevant to investing and trading. The value of any corporate security is generally determined through an estimate of the company’s productivity. For example, the shares of stock of a corporation or generally based upon the company’s financial performance.
Financial analysts consume company information and make projects about financial performance and the resulting company valuation. They provide these projections to clients, who trade in these securities.
A whisper number is generally unique from publicly available knowledge or information (and generally unique from the public consensus on performance and valuation). As such, trades made based on the whisper number seek to take advantage of this specific information and grabbing value through trading.
What is the Effect of the Whisper Number?
Select investors often make trades based upon a whisper number. If the financial performance (e.g., earnings per share) is above the public consensus, then the price of the shares goes up. If it is below the public consensus, prices go down.
If the whisper number is more accurate that public consensus, traders can make selective trades that buy shares for lower than actual value or sell shares for higher than the actual value - thereby gaining from the whispered information.
As a note of caution, whisper numbers have frequently been the means through which individuals defraud investors.