November 8, 2012
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.
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