Shanghai skyscrapers. Image source: Getty Images.

What happened

Shares of Fang Holdings Ltd. (NYSE:SFUN) were down 12.2% as of 2:47 p.m. EST, after the Chinese online real estate portal released weaker-than-expected third-quarter 2016 results.

So what

Quarterly revenue rose 1% year over year, to $250.1 million, as growth in e-commerce services revenue was partially offset by declines from marketing services. Analysts, on average, were anticipating significantly higher revenue of $296.5 million.

On the bottom line, that translated to adjusted operating income of $2.4 million, and an adjusted net loss attributable to Fang shareholders of $14.2 million, or $0.03 per American depositary share (ADS). By comparison, in last year's third quarter Fang incurred an adjusted operating loss of $30.6 million, and an adjusted net loss of $31.9 million, or $0.08 per share.

Fang chairman and CEO Vincent Mo explained:

This quarter was one of the toughest quarters in Fang's history. Our transformation coupled with the market regulations by the government was very challenging. Transformation is not easy but we are determined and optimizing the operations details. The company achieved operational profitability and we are confident to turn around the company.

Now what

For the full year 2016, Fang now anticipates revenue of almost $928 million, representing year-over-year growth of roughly 5%. Previously, Fang expected full-year revenue of nearly $1.149 billion.

In the end, Fang might well be on track with its continued transformation, and it's encouraging to see the company turn an operating profit. But given its significant top-line shortfall and regulatory headwinds from the Chinese government, it's no surprise to see investors taking a big step back from Fang stock today.

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