Why Millenial Media, Inc. Shares Melted Down Today

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 Millenial Media, (NYSE: MM  ) plunged more than 14% Thursday after the company turned in disappointing forward guidance.

So what: Adjusted fourth-quarter revenue rose 44% year over year, to $109.5 million, which translated to adjusted net income of $0.08 per share. On a GAAP basis, Millenial Media turned in a net loss of $0.04 per share. By contrast, analysts were looking for a loss of $0.05 per share on sales of $95.62 million.

However, the company also expects total revenue in the current quarter to be in the range of $72 million to $76 million. Analysts, on average, were looking for significantly higher first quarter revenue of $83.25 million. Adjusted EBITDA is also expected to come in at a loss between $5 and $6 million.

Now what: Millennial Media's fourth-quarter results were decent, but there's no denying that our market is a forward-looking machine. With shares currently trading at a lofty 23 times this year's estimated earnings -- and keeping in mind those estimates are likely to fall as analysts have time to fully digest today's news -- I think investors would be wise to simply watch from the sidelines for now.

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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9/3/2015 4:03 PM
MM $1.74 Up +0.40 +29.85%
Millennial Media CAPS Rating: *