Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Impinj Crashed Today

By Timothy Green - Updated Feb 2, 2018 at 12:52PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Abysmal guidance and an executive departure add up to a very bad day for the stock.

What happened

Shares of radio-frequency identification solutions provider Impinj (PI -6.89%) tumbled on Friday after the company reported preliminary fourth-quarter results. While Impinj expects its fourth-quarter revenue to be slightly above its prior guidance, the company's outlook for the first quarter called for a steep revenue decline. The stock was down about 44.5% at 11:50 a.m. EST.

So what

Impinj expects to report fourth-quarter revenue of between $29.0 million $30.0 million, above its previous guidance of $28.25 million to $29.75 but well below the $33.7 million it reported during the prior-year period. Impinj pointed to strong unit-volume growth in its fixed-reader business as one of the main drivers of the better-than-expected revenue.

A man with his head on a table, with a slumping stock chart in the background.

Image source: Getty Images.

This slightly good news was completely drowned out by the company's first-quarter guidance. Impinj expects to produce first-quarter revenue of between $20 million and $22 million, down about 34% year over year at the midpoint. The company said that shortened endpoint IC lead times and reductions in partner inventory have reduced the backlog, leading to the weak guidance despite growth in endpoint consumption and the number of deployments.

Impinj expects its inventory to grow during the first quarter due to weak sales, but the company doesn't expect there to be any meaningful risk of obsolescence.

In separate news, Impinj announced that CFO Evan Fein will step down effective March 30. A boilerplate reason was given by the company.

Now what

Impinj has been having revenue issues for the past few quarters. The company slashed its outlook for IC endpoint shipments in August of last year due to a few large customers delaying planned rollouts. During the third-quarter conference call in November, CEO Chris Diorio indicated that the company wasn't entirely sure why volumes were declining: "The reasons aren't completely clear to us, but we do not believe our market share has changed materially."

Impinj's disastrous first-quarter guidance, coupled with the departure of the CFO, may mean there are some deep problems at the company beyond delayed roll-outs. Impinj will report its full fourth-quarter results on Feb. 15. Management has a lot of explaining to do.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Impinj, Inc. Stock Quote
Impinj, Inc.
$54.63 (-6.89%) $-4.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.