Profit warning is a warning declaration issued by a listed company to investors through a stock exchange

Stock exchange

A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...

. It warns that the profit

Profit (accounting)

In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...

 of the company in the coming quarter will obviously decline

Decline

Decline is a change over time from previously efficient to inefficient organizational functioning, from previously rational to non-rational organizational and individual decision-making, from previously law-abiding to law violating organizational and individual behavior, from previously virtuous to...

 or even have a loss

Income statement

Income statement is a company's financial statement that indicates how the revenue Income statement (also referred to as profit and loss statement (P&L), statement of financial performance, earnings statement, operating statement or statement of operations) is a company's financial statement that...

 compared with that of the same quarter of previous year. Investors should be aware of the possible loss

Income statement

Income statement is a company's financial statement that indicates how the revenue Income statement (also referred to as profit and loss statement (P&L), statement of financial performance, earnings statement, operating statement or statement of operations) is a company's financial statement that...

 when buying or selling its stock

Stock

The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

.

Sometimes, profit warning is considered to be a neutral term and it refers to "estimated results improvement". Some companies may issue "profit warning" to inform that their expected profit will obviously increase in the coming quarter.