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 patent company RPX (RPXC) dropped as much as 10% today after reporting second-quarter earnings.
So what: Revenue rose 4% to $57.5 million, which was in line with analysts' estimates. On the bottom line, net income reached $10.7 million and on a non-GAAP basis, earnings per share were $0.26, $0.02 ahead of estimates.
Now what: If results are better than estimates, why is the stock down? A big reason is full-year earnings guidance, which was $50 million to $53 million. At best that will meet expectations of $0.99, and after an earnings beat like this quarter, you would expect the company to raise expectations. I don't think this is a big deal, and the market's reaction is probably overdone, but watch for earnings momentum in the second half of the year to determine what direction the stock will head long-term.
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