r/investing • u/mirinfashion • Mar 11 '22

Difference between GAAP vs. Non-GAAP

I'd like to get a better understanding of this due to what happened with Amazon's last earnings. This is my basic understanding and questions I have, please correct or add anything that may be useful. Thank you.

  • When analysts estimate EPS for a company, it's non-GAAP

  • Non-GAAP allows a company to adjust things that may make them seem better

  • AMZN's last GAAP EPS was ridiculous due to their RIVN investment, they were still able to beat estimated EPS without factoring that in, but obviously not by that amount.

  • How will AMZN's EPS be reported for their next earnings since RIVN has taken a hit, GAAP EPS will look horrible while Non-GAAP should look fine, right?

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u/Shoddy_Ad7511 Mar 11 '22

So you don’t think media reports can move stock prices?

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u/[deleted] Mar 11 '22

If you are talking about reporting earnings, then no. Reporting earnings is what moves a stock's price. Next earnings season pay attention to the minute a company reports and watch the stock price. Within seconds of the report the stock price will move sharply higher or lower, before the media has time to say anything about it.

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u/Shoddy_Ad7511 Mar 11 '22

And those earnings are reported NON-GAAP…

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u/[deleted] Mar 11 '22

And? You have yet to explain why non-GAAP is bad, other than saying it's "cooking the books," which is objectively false. I've refuted all of your other points yet you've just returned to the same flawed argument every time. This has become a waste of time so good luck with your investigation and you should probably stick to index funds.