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As you work with your news-reading strategies, you have to take note of any profit warnings. A profit warning is a difficult report that suggests a company is not going to do as well as hoped. A company says its earnings are not going to meet certain expectations.
An example of this is Rovio (HEL: ROVIO), a Finnish company best known for producing the Angry Birds series of games. The stock had been trading at nearly €10 for months at a time. In February 2018, Rovio issued a profit warning. The report said that Rovio was not going to make its original operating margin. The company was aiming to get a margin of 15 percent but the actual total was only half that amount. The company had tens of millions of Euros in fewer sales than what the company had suggested. This profit warning gave investors in the Finnish investment market the feeling that Rovio was in trouble. As a result, the stock value dropped to around €5 in just a few days.
