Why Acacia Research's Shares Dropped

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 Acacia Research (NASDAQ: ACTG  ) fell 11% today after the company released disappointing earnings.

So what: Revenue dropped 54% in the second quarter, to $23.1 million, and the company lost $12.5 million, or $0.26 per share, during the quarter. On an adjusted basis, the company earned $0.13 per share, but even that was well below the $0.47 analysts expected. 

Now what: Results can fluctuate wildly quarter to quarter but the general trend for Acacia is downward, and that's concerning. For the six months ended June 30, the company's revenue fell 33%, and earnings dropped 67%, mainly due to higher litigation costs. The bottom line is that this is a highly risky stock, and technology companies that may license their patents don't necessarily see the patent portfolios as the deterrent management hoped it would be.

.Interested in more info on Acacia Research? Add it to your watchlist by clicking here.


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