The Georgia Bulldogs had a strong first half of football during Monday night's College Football Championship game, only to surrender the lead -- and ultimately the title -- to the Alabama Crimson Tide in the second half. Sometimes life imitates Wall Street, and there were a few companies that started out the year strong, only to come undone during the latter half of 2017.
Trivago (TRVG 0.78%), Sierra Wireless (SWIR), and Momo (MOMO 0.17%) are three stocks that were market darlings during the first half of 2017 -- soaring at least 81% through the first six months of the year -- only to plunge by at least 30% during the final six months of 2017. Let's take a look at the rises and falls of these three up-and-down investments.
Image source: Momo.
Trivago: Up 81% in the first half, down 68% in the second
The leading hotel aggregator went public in late 2016, and it was on fire. Revenue soared 68% and 67% in the first two quarters of 2017, but then it proved mortal. Trivago's business relies on portals, property owners, and other marketers to bid for placement, and it relies on the world's two largest portals to drive more than half of its revenue. That wasn't a problem until it became a problem.
Trivago's business took a hit during the third quarter when its two leading advertisers tweaked their bidding strategy, lowering their cost for leads. Revenue would grow at a mere 17% clip in the third quarter, and Trivago's guidance calls for just 2% to 15% top-line growth for the recently concluded fourth quarter. Trivago expects to post negative revenue growth during the first half of this year before returning to growth in the second half of this year, a twisted reversal of how 2017 played out.
Sierra Wireless: Up 88% in the first half, down 31% in the second
The provider of mobile connectivity products became a hot stock when it emerged as a leading maker of Internet of Things connectivity chips. Sierra Wireless took its early position in the niche and pounced on it by snapping up several smaller players.
Sierra Wireless has posted double-digit revenue growth in four consecutive quarters, but the comparisons have been easy since it had posted four straight quarters of top-line declines before that. Sierra Wireless is two years removed from the last time it posted two-year compounded revenue growth in the double digits. Sometimes industry buzzwords don't translate into material organic growth.
The stock has taken steps back following poorly received financials and announcing dilutive acquisitions. The midpoint of its guidance for the fourth quarter calls for a decline in earnings and revenue growth decelerating to the single digits.
Momo: Up 139% in the first half, down 44% in the second
China's Momo got its start as an online dating website, but it became a market darling when its video-streaming platform started to take off. Momo has now rattled off four consecutive years of triple-digit percentage growth or better.
Unfortunately for Momo and its investors, the inevitable slowdown of growth is happening. Momo posted another period of triple-digit percentage growth for the third quarter, but its guidance calls for 50% to 56% top-line growth for the quarter that ended last month. The platform's popularity keeps growing. We're up to 94.4 million active users. However, the number of premium members has been stagnant at 4.1 million for each of the past three quarters. The market is concerned about how rapidly growth will decelerate, though risk-tolerant value investors -- an oxymoron, sure -- may appreciate that Momo is now trading for less than 13 times this year's projected profitability.
