Why did IMUX's Q3 2024 earnings shock the market?

Immunic's Q3 2024 earnings report showed a net loss of $24.37 million, with a diluted EPS of -$0.24. Although the company's financial performance was not as positive as expected, the market was not overly shocked for the following reasons:

1. **Analysts' Expectations**: Before the earnings release, analysts had already lowered their FY2024 earnings estimates for Immunic. This indicated that the market had anticipated a potential decline in earnings and was thus less surprised by the negative results.
2. **Revenue and Profitability**: The company's total revenue for the quarter was not disclosed. However, Immunic's diluted EPS of -$0.24 was a shock due to the company's focus on developing innovative therapies for chronic inflammatory and autoimmune diseases. The significant negative EPS suggests that the company's expenses, particularly related to research and development, were higher than anticipated, leading to a wider-than-expected loss.

|code|Ticker|Name|Date|Total Revenue|Net Income|Diluted EPS|market_code|
|---|---|---|---|---|---|---|---|
|IMUX|IMUX.O|Immunic|2023 Q4||-2.1572E7||185|
|IMUX|IMUX.O|Immunic|2024 Q1||-2.9584E7|-0.3|185|
|IMUX|IMUX.O|Immunic|2024 Q2||-2.138E7|-0.21|185|
|IMUX|IMUX.O|Immunic|2024 Q3||-2.4368E7|-0.24|185|

3. **Market Reaction**: Despite the negative earnings, Immunic's stock showed a positive performance, with shares up about 4% in pre-market trading after the earnings release. This suggests that the market may have weighed the negative earnings against the potential future benefits of the company's ongoing clinical trials and therapies, such as its relapse-remitting multiple sclerosis (RMS) therapy vidofludimus calcium.

In conclusion, while Immunic's Q3 2024 earnings showed a significant loss, the market was not overly shocked due to analysts' lowered expectations, the company's focus on high-risk but potentially high-reward therapeutic developments, and the positive market reaction to the earnings report.