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Why CuriosityStream Stock Crashed Today

By Jon Quast - May 12, 2021 at 12:48PM

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First-quarter revenue fell short, but full-year revenue is still on track.

What happened

Shares of CuriosityStream (CURI 5.21%), a streaming service specializing in educational content, crashed on Wednesday after the company reported financial results for the first quarter of 2021. Results missed expectations and that has investors worried. As of noon EDT, the stock was down almost 20%.

So what

In Q1, CuriosityStream generated revenue of $9.9 million, up 33% year over year. This was a sharp deceleration from the 70% year-over-year revenue growth the company enjoyed in the fourth quarter of 2020. Moreover, Wall Street was expecting more. According to data provided by S&P Global Market Intelligence, analysts had expected revenue of $10.6 million.

A rising red arrow breaks near the top resulting in the tip of the arrow pointing down.

Image source: Getty Images.

To go along with earnings results today, CuriosityStream announced the acquisition of One Day University for an undisclosed amount. One Day University offers lectures from college and university professors in various topics. Video content can be accessed from its growing library but there are also new live streams five days a week. With CuriosityStream's emphasis on educational content, One Day University should be seen as a complementary acquisition.

Now what

While Q1 results may have fallen short of analysts' expectations, CuriosityStream management reaffirmed full-year revenue guidance of $71 million. Considering the majority of revenue is generated from subscribers on an annual plan, it's relatively simple for this company to predict future revenue. Indeed, management says it has visibility on 90% of its 2021 revenue. 

Considering full-year revenue guidance has been reaffirmed, it might be an overreaction to fret about Q1 as the market is today. Now down over 60% from previous highs, it might be worth giving this small-cap stock a second look. 

Jon Quast has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CuriosityStream Inc. The Motley Fool has a disclosure policy.

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