This paper examines the impact of beauty contest driven higher order beliefs (HOBs) on stock returns upon news releases. Consistent with theories, HOBs create a wedge between prices and the consensus fundamental value, inducing the exacerbation of existing mispricing on news release days. This mispricing exacerbation effect is predominantly driven by the impact of high sentiment news on overpriced stocks, amplified by high frequency traders (HFTs), and experiences a subsequent reversal. In addition, the asymmetric impact of high and low sentiment news on overpriced stocks and the lack of an impact on underpriced stocks is driven by more positive news being released in recent years, investors paying more attention to overpriced stocks, and short sale constraints.