January 31, 2013
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 Velti (NASDAQ: VELT ) have lost 10% today, following a horrendous performance yesterday during which shares lost about 25% at the end of the day. The company's executives must have said something really unpleasant at its analyst day, as two firms downgraded the company's shares this morning.
So what: Velti got hit with downgrades from Wells Fargo and Craig Hallum, the latter of which slashed its target price from $12 all the way to $4 -- which is a little higher than its current price. This follows closely on the heels of a downgrade from Zacks earlier this month, which followed a Jeffries Group downgrade in November. Velti has apparently said that it will divest assets in areas where it takes a long time to collect fees, and refused to provide guidance for the 2013 fiscal year. Wells Fargo specifically noted that it felt that Velti's "greater discipline on contract quality and geographical mix" are likely to hurt its top and bottom lines in the near term.
Now what: Based on this slew of downgrades and bad news, Velti appears to have become a falling-knife stock. You might be able to grab it by the handle, but it's more likely that you'll cut yourself trying. It makes more sense to wait for further details before getting invested in this dangerous stock.
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