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 Xoom (UNKNOWN: XOOM.DL ) fell by more than 11% during intraday trading Wednesday after the company reported solid quarterly earnings.
So what: Quarterly revenue rose 62% year over year to $32.3 million, which translated to a GAAP net income of $0.03 per diluted share, compared to a loss of $0.45 per share in the same quarter last year. On an adjusted basis, earnings came in at $0.06 per diluted share. For reference, both numbers beat expectations from analysts, who, on average, were expecting an adjusted loss of $0.03 per share on just $28.71 million million in sales.
Now what: Despite the beat, however, investors were caught off guard when Xoom provided in-line guidance for lower fourth-quarter revenue of $30.2 million to $31.2 million, and also guided in-line for a Q4 adjusted loss per share in the range of $0.03 to $0.01.
That's all well and good, but with shares currently trading around 105 times next year's estimated earnings, it's safe to say investors didn't like seeing the company's sales momentum apparently waning in the fourth quarter. Even so, management did clarify on the subsequent conference call that much of their lower guidance number was due to the "obvious unpredictability of the [Indian] rupee exchange rate," so the business isn't necessarily suffering as much as its forward revenue guidance might imply.
In the end, as long as investors recognize they're paying a premium for this stock, I think today's pullback could represent a solid buying opportunity over the long term.
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