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Why Vonage Holdings Shares Fell 15.4% on Thursday

By Travis Hoium - Updated Feb 18, 2021 at 5:08PM

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Losses are mounting for the company.

What happened 

Shares of Vonage Holdings (VG -0.43%) dropped as much as 15.4% in trading on Thursday after the cloud communications provider released fourth-quarter 2020 financial results. Shares closed the day down 12.3%. 

So what

Revenue rose 4.4% in the quarter to $323.3 million, but the net loss grew from $2.4 million a year ago to $14 million, or $0.06 per share. On an adjusted basis, which pulls out one-time items, earnings were $0.02 per share, which fell short of the $0.05 that analysts expected. 

Man talking on the phone at home.

Image source: Getty Images.

Another surprise was the decision to keep the consumer business instead of selling it. Management said the expected $600 million in cash generation over the next five years played a role, and there may not have been many compelling offers given the 15% drop in revenue for the segment last quarter to $79 million.

Now what

For the full-year, Vonage lost $36.2 million, and that alone makes it tough to see the company as a value stock. And without much revenue growth, investors abandoned shares today. Unless we see an improvement on either the top or bottom line, this is a company I would be leery of in a highly competitive communications market.  

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