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Why Brightcove Stock Plunged Today

By Chris Neiger – Jul 29, 2021 at 3:40PM

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Investors aren't happy with management's full-year revenue guidance.

What happened 

Shares of Brightcove, Inc. (BCOV -2.15%), a cloud-based video platform company, tumbled today after it reported second-quarter 2021 results late yesterday. Although the company beat Wall Street's consensus earnings and revenue estimates, investors appear to be unhappy with the its third-quarter and full-year outlook.

The tech stock fell by as much as 18.2%, and was down by 16.1% as of 3:03 p.m. EDT.

So what 

Brightcove's revenue increased by 7% to $51.5 million in the second quarter, outpacing analysts' consensus estimate of $50.1 million. Additionally, the company blew past Wall Street's non-GAAP earnings estimate of $0.03 per share and instead reported earnings of $0.11 per share. 

A white line graph on a blue background.

Image source: Getty Images.

Jeff Ray, Brightcove's CEO, said in a press release that, "Brightcove's second quarter performance was highlighted by revenue that was ahead of expectations and 33% growth in adjusted EBITDA [earnings before interest, taxes, depreciation, and amortization]."

But despite the company's quarterly revenue and earnings beat, investors were quick to sell the company's stock today. That's likely because management said that revenue in the third quarter would be in the range of $50.5 million to $51.5 million, which falls short of the $52.5 million that analysts were estimating.

Additionally, Brightcove said its full-year revenue will be $213 million at the high end of guidance, which again falls short of analysts' consensus estimate of $214.9 million for the year.  

Investors were also likely reacting to the fact that two analysts lowered their price targets for Brightcove stock today. An analyst at Lake Street lowered its price target from $25 to $17, while Northland analyst Michael Latimore lowered its target price from $29 to $23.

Now what 

With the company providing lower-than-expected revenue guidance for the third quarter and full-year 2021, investors may want to be cautious with Brightcove's stock right now. The company's share price has been very volatile this year and has fallen nearly 40% year to date.

Investors may want to watch Brightcove's next few quarterly-earnings reports closely before making a decision about investing in the company. 

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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