Background: Temple & Webster is one of Australia’s biggest online furniture and homewares retailers. Launched in 2011 during the online shopping boom, it listed in 2016, crashed hard, then made a full COVID-era comeback that sent its share price soaring.

What happened: Now, Temple and Webster announced an 18% revenue growth from July to November this year. On top of that, it hit record customer levels and lifted average order values by 3%.

What else: But analysts were expecting about 23% revenue growth, so the miss sparked a sharp reaction and the share price dropped 30 percent to an eleven month low. High-growth companies live and die by expectations, and Temple & Webster learned that the hard way... even strong results don’t matter if they land below consensus.

What's the key learning?

💡Consensus is the average of what analysts think a company will deliver. Fund managers use it as a benchmark to judge whether a business is outperforming or underperforming.

💡When a company beats consensus the share price usually lifts because the market upgrades its expectations of future profits.

💡Missing consensus even slightly can hit a high growth stock hard since valuations depend on future earnings, which is why a 5 percent revenue gap triggered such a sharp sell off for Temple and Webster (and why Gerry Harvey keeps calling them “overpriced to buggery”).