Previously the stock price was based on expectations, and if those expectations were not met the price could be expected to decline to reflect the actual performance.

Investors drop stock after report when earning didn't reach predicted level, but confusing part is that sometimes the results are exactly as predicted (and in theory priced in) but some investors are still disappointed and start the sell-off.

Taking profits at the top

Perhaps large investors are moving towards the distribution part of the cycle. (Longer time scales sure look like it on the index charts.) Time will tell

Good and bad are relative. If I bought stock with the expectation that Google would make $100B in profit and they "only" made $80B then the earnings were bad from my perspective and I'd be inclined to sell my position.

Valuation doesn't come from what's happening now, it comes from what is expected in the future. The whole point is to put in money to make more money later.

The earning report doesn't need to be bad for investors to see the projected outcomes for future quarters and say "hm... my money is best put somewhere else, whose earnings report showed more potential for growth".