What happened

Shares of Vonage (NYSE:VG) fell as much as 16.8% on Wednesday morning, recovering to a milder 15.5% downside as of 10:50 a.m. EST. The provider of cloud communications services for businesses posted third-quarter results before the opening bell, largely leaving investors unimpressed.

So what

Vonage's third-quarter revenues rose 15% year over year to $302.5 million, just below Wall Street's consensus target at $302.9 million. The company saw an adjusted net loss of $0.02 per diluted share, down from a profit of $0.09 per share in the year-ago report and far below the analyst consensus, which had pointed to a $0.07 profit per share.

Digital rendering of a red rotary phone under a small cloud that's dropping torrential rain on it.

Image source: Getty Images.

Now what

The stock has now fallen 21% over the last quarter, including today's sudden drop. Even so, Vonage's shares trade at a hefty valuation ratio of 53 times trailing earnings. The company stands in the midst of a sharp strategy update, relaunching a portfolio of diverse business-class services under the unified Vonage brand. Management hopes to accelerate its marketing and customer acquisition efforts under this simpler corporate image.

"We've made a lot of progress on our strategy and continue to invest in the right areas," said CEO Alan Masarek in a prepared statement. "Market demand continues to grow, and Vonage is well-positioned for long-term success."

So Vonage intends to go places, but its investors are not showing any patience with a rebranding effort that could take years to pay any serious dividends. Personally, I view the price drop as a buying opportunity despite the nosebleed valuation, because I like what the company is doing here.