Why Sungy Mobile Ltd. Shares Sank 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 Sungy Mobile Ltd. (NASDAQ: GOMO  ) fell 10% Wednesday after the Chinese mobile Internet services specialist released weaker-than-expected first-quarter earnings and forward revenue guidance.

So what: Quarterly revenue rose 63% year over year to $15.6 million, exceeding analysts' expectations for sales of roughly $15.3 million. However, adjusted earnings came in at just $0.11 per diluted American depositary share, well below consensus estimates, which called for earnings of $0.15 per share.

In addition, Sungy Mobile sees current quarter revenue in the range of $16.1 million to $17 million, also falling short of analysts' expectations for Q2 sales of roughly $18 million.

Now what: Shares of Sungy mobile might look cheap at first glance trading under 11 times next year's expected earnings, but keep in mind those estimates are likely to drift lower as analysts have time to fully digest today's news. For now, I prefer to simply watch Sungy Mobile from the sidelines.

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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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9/2/2015 3:59 PM
GOMO $4.49 Down +0.00 +0.00%