What happened

Shares of Infinera (NASDAQ:INFN) have rebounded today, up by 8% as of 3 p.m. EDT, following a sell-off yesterday that came in response to first-quarter earnings. Investors may realize they overreacted.

So what

First-quarter earnings results had topped expectations, and guidance for the second quarter also came in above the consensus estimate. Yesterday's drop could have potentially been driven by some comments from CEO Thomas Fallon on the earnings call, when Fallon noted that many of Infinera's larger competitors have been very aggressive on pricing lately.

Ethernet cable with fiber optics in the background

Image source: Getty Images.

Fallon made it clear that Infinera wasn't overly concerned, but the comments could have still rattled investors. "And we're seeing very, very aggressive pricing from some of the larger guys," Fallon had said. "I don't raise it up because it scares us to death, I raise it up because it is a little bit of a new dynamic and I think that there is a little bit of a land grab mentality going on."

Now what

Shares lost 20% of their value yesterday, despite the fact that many of Infinera's pertinent metrics are starting to improve. For the second quarter, the company said sales should be in the range of $203 million to $213 million, while analysts would have been happy with just $203.4 million in revenue.

For the latter half of the year, Fallon is "cautiously optimistic" that Infinera will be able to grow. The company is "on track" to be profitable and post positive operating cash flow for the second half of 2018.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.