Shares of GTT Communications (NYSE:GTT) slumped on Tuesday after the telecommunications company disclosed that it would delay the filing of its 10-Q for the quarter ended June 30. The stock was down about 11.5% at 1:35 p.m. EDT.
GTT said in a filing with the SEC that it discovered "certain issues related to the recording and reporting of Cost of Telecommunications Services and related internal controls" while it was closing its books for the quarter. Management, the audit committee of the board of directors, and outside counsel and consultants are now reviewing these issues to determine if any restatements of previously issued financial statements are required.
GTT did not provide a date for when it expects to file its quarterly report, and it does not know whether the review will uncover additional issues. The company does not anticipate filing on or before Aug. 17, the end of the extended period for the filing.
The delayed filing prompted analysts at Raymond James to downgrade the stock from "outperform" to "underperform" and withdraw its price target. Raymond James no longer has confidence in the reported numbers, and it expects previously reported results to be restated.
The outcome of this review could range from minor issues that don't require any restatements to significant problems that drastically change previously reported results. At this point, it's too early to tell.
Shares of GTT were already trending lower prior to this development. Including Tuesday's rout, the stock is now down about 56% since the beginning of 2020.