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Why MakeMyTrip Shares Crashed

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Indian travel service MakeMyTrip  (Nasdaq: MMYT  ) were making an emergency landing today, falling as much as 28% after the company badly missed estimates.

So what: The company took a big hit on currency translation as revenues grew 26% in constant dollars but only 4% with exchange rates factored in. Profit for the quarter was just $0.03 a share, down from $0.04 in the quarter a year ago, and just half of the $0.06 analysts were expecting. CEO Deep Kalra blamed "difficult operating conditions" and the uncertainty of the domestic airline industry. Without adjustments, the company actually posted a loss of $1.2 million for the quarter, and its revenue growth forecast for the year was cut by about half.

Now what: The online travel industry is a tough space to play, as there is little differentiation between competitors other than brand recognition. Consequently, I would be reluctant to invest in a company like MakeMyTrip even if it were performing well. Investors may be heartened by the solid top-line growth in constant dollars, but MakeMyTrip needs to make more than just pennies per share in profit if it wants to command a stock price north of $10.

Don't miss your next connection to MakeMyTrip. Add the company to your Watchlist by clicking here.

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Related Tickers

10/28/2016 12:06 PM
MMYT $29.10 Up +0.50 +1.75%
MakeMyTrip CAPS Rating: *