Please ensure Javascript is enabled for purposes of website accessibility

Why Infinera Stock Is Getting Slammed Today

By Brian Feroldi – May 9, 2019 at 9:55AM

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

Shares fall hard after the company reported mixed first-quarter results and issued weak guidance.

What happened

Shares of Infinera (INFN -4.18%) are plunging today, down 28% as of 10:24 a.m. EDT, after the telecom equipment provider reported first-quarter results paired with weak guidance.

So what

Here are the key numbers from the first quarter:

  • Revenue surged 44% to $295.6 million. This figure was below management's guidance range and fell short of the $311 million that Wall Street was expecting.
  • Non-GAAP gross margin declined 840 basis points to 35.3%. This came in above management's guidance range.
  • Non-GAAP net loss was $41.2 million, or $0.23 per share. That figure was better than the consensus estimate among the analyst community for a $0.27-per-share loss.

On the call with investors, management stated that Infinera's order flow remains strong but that it is not translating into revenue on the timeline that was anticipated. The delay is expected to hamper near-term growth in the upcoming quarter:

  • Non-GAAP revenue is forecast to land between $290 million and $310 million. For context, market watchers were looking for $336 million.
  • Non-GAAP gross margin is expected to be between 28% and 32%.
  • Infinera is projecting a non-GAAP loss between $0.30 and $0.26 per share. That's also far worse than the consensus estimate of $0.18-per-share loss.

If the revenue miss and weak guidance weren't bad enough, CFO Brad Feller also announced that he will be retiring later this year.

Man slapping head with chart heading down in background

Image source: Getty Images.

Add it all up, and it is no surprise to see shares being hammered today.

Now what

The news that Infinera's order book is filling up should provide investors with some comfort. However, if the company fails to translate that order book strength into revenue and profits then it will do investors no good.

Infinera's stock is currently at an all-time low, which speaks volumes about Wall Street's confidence in the future potential of this business. Management has a lot of work ahead of them if they hope to regain investors' trust anytime soon.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool recommends Infinera. The Motley Fool has a disclosure policy.

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

Infinera Corporation Stock Quote
Infinera Corporation
INFN
$4.58 (-4.18%) $0.20

*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
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

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.