Please ensure Javascript is enabled for purposes of website accessibility

Why BigCommerce Tumbled 12% on Friday

By James Brumley – Aug 6, 2021 at 4:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are wondering how long it will take the young company to make greater profit progress.

What happened

Shares of e-commerce service provider BigCommerce Holdings (BIGC 5.11%) were down 12.1% headed into Friday's close, largely in response to last quarter's disappointing results.

So what

Investors are certainly surprised, given the stock's reversal. BigCommerce shares had spent the past three months recovering from a sell-off spurred by the previous quarter's similarly lackluster numbers, climbing nearly 67% from May's low to yesterday's close. Friday's setback wiped away roughly a third of that rebound rally.

Businessman watching a chart fall out of sight.

Image source: Getty Images.

The catalyst was Q2 numbers. Sales of $49 million were 35% higher year over year, and the per-share loss of $0.17 was significantly less than the loss of $0.54 per share from the second quarter of 2020. The bottom line, however, missed analyst estimates for a more muted loss of only $0.11 per share; topping sales expectations of $46.8 million wasn't enough to prevent a pullback.

Strong revenue growth forecasts aren't helping either. The company projects revenue of between $54.5 million and $55 million for the quarter now underway, and sales of between $210.7 million and $211.7 million for the full fiscal year, both of which are better than current analyst estimates in addition to being better than year-ago comps. In the third quarter of 2020, BigCommerce produced $39.7 million worth of revenue.

Now what

It's difficult to pinpoint investors' exact worry; there may be more than one. One of them is certainly concern that in an environment where smaller merchants are reportedly desperate for self-sufficiency when it comes to their e-commerce presence, BigCommerce isn't exactly knocking it out of the park. The lingering lack of profitability may also be a stumbling block, even if the company is making progress on that front.

None of this is exactly new for this young company, however. This was always a high-risk/high-reward prospect. That's not changed since yesterday. As such, Friday's tumble is a buying opportunity for investors who can stomach the risk.

James Brumley has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends BigCommerce Holdings, Inc. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Nearly 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

BigCommerce Stock Quote
BigCommerce
BIGC
$8.64 (5.11%) $0.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
349%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.