Please ensure Javascript is enabled for purposes of website accessibility

Why Switch, Inc. Stock Plunged Today

By Steve Symington - May 15, 2018 at 4:53PM

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

The data center infrastructure specialist delivered an underwhelming quarter. Here's what investors need to know.

What happened

Shares of Switch Inc. (SWCH -0.30%) fell 14.8% on Tuesday after the data center facilities company announced weaker-than-expected first-quarter 2018 results.

More specifically, Switch's revenue grew 10% year over year to $97.7 million, and translated to net income attributable to Switch of $0.7 million, or $0.02 per diluted share. But analysts, on average, were looking for earnings of $0.05 per share on revenue of $99.8 million.

IT employee working in a large data center filled with servers

IMAGE SOURCE: GETTY IMAGES.

So what

Still, Switch president and general counsel Thomas Morton insisted the company is "pleased" with its progress in both growing its ecosystems and "positioning Switch as a partner of choice for global enterprises."

"Switch continues to execute on its market expansion strategy," elaborated Switch's founding chairman and CEO Rob Roy. "We are excited about our growth prospects in 2018 in our Citadel and Pyramid Primes, and the continued growth in our Core Campus."

To that end, Switch announced a 15MW colocation deal during the quarter with an unnamed international streaming media customer that will use its North American data centers as a worldwide distribution hub for its services starting in July of this year. Switch also signed new contracts at The Pyramid Campus in Michigan with a large electric utility company and a major debit and credit card processor this quarter.

Now what

As such, Switch reaffirmed its full-year guidance, which calls for revenue of $423 million to $440 million, and adjusted EBITDA of $216 million to $224 million.

Given its slight underperformance in the first quarter, however, it's obvious that the market was looking for more. And it's no surprise to see shares of this recently IPO'd company tumbling in response.

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

Switch, Inc. Stock Quote
Switch, Inc.
SWCH
$33.25 (-0.30%) $0.10

*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 service.

Stock Advisor Returns
331%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

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.