The U.S. Securities and Exchange Commission (SEC) is moving to end quarterly earnings requirements from publicly traded companies days after President Donald Trump called for the change.
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Paul Atkins, who is chair of the Wall Street regulator, said the SEC will propose a rule change that will switch the current requirement for quarterly earnings reports to a semiannual schedule. The change will mean that companies such as Apple (AAPL), Nvidia (NVDA), and Tesla (TSLA) will only be required to report their financial results twice a year.
However, Atkins said if the rule change is approved, it will be up to individual companies to decide whether they report their financial results on a quarterly or semiannual basis. “For the sake of shareholders and public companies, the market can decide what the proper cadence is,” said Atkins in a media interview.
Transparency Issues
Current regulations require publicly traded companies in the U.S. to report earnings on a quarterly basis, though providing forecasts is voluntary. In recent days, President Trump has advocated for switching to a semiannual schedule, saying it will “save money, and allow managers to focus on properly running their companies.”
The disclosure rules can be changed by a majority vote at the SEC, where Republicans currently hold a 3-1 voting majority, with one open seat. Many other countries, notably in Europe, require that public companies report their financial results twice a year, and plenty of CEOs are in favor of the change.
However, critics of the proposed change say that semiannual reporting could erode transparency at public companies, which is not in the interest of shareholders.
Is TSLA Stock a Buy?
The stock of Tesla has a consensus Hold rating among 34 Wall Street analysts. That rating is based on 14 Buy, 13 Hold, and seven Sell recommendations issued in the last three months. The average TSLA price target of $313.62 implies 23.51% downside risk from current levels.
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