Why Trulia’s Shares Tanked

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 Trulia (NYSE: TRLA  ) have cratered today, in spite of beating top-line estimates and posting a slightly narrower-than-expected loss per share. The recent IPO has lost 19% of its value today.

So what: Trulia's revenue result of $18.5 million easily bested the analyst consensus of $17.2 million, and adjusted quarterly losses of $0.10 per share were also better than the $0.13 loss per share that analysts had expected. The company also posted narrowly positive EBITDA of $0.3 million, the first positive EBITDA quarter of its existence.

Trulia now expects fourth-quarter revenue in the $18.8 million to $19.2 million range, which bests the $18.2 million consensus. It seems likely that a major cause for the drop was Trulia's wider net losses, attributable to common stockholders, which were $1.7 million this quarter compared to a $1.5 million loss for the year-ago quarter.

Now what: Despite this big drop, Trulia remains a costly stock with a price-to-sales ratio of 11. It seems that Trulia will need faster growth to appease picky analysts, although at least one -- RBC Capital Markets analyst Andre Sequin -- called this a "very positive start." Positive or not, the online real-estate market is ferociously competitive, and Trulia's got an uphill battle ahead to justify its high valuation at this time.

Want more news and updates? Add Trulia to your Watchlist now.


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