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Why Switch Stock Fell on Friday

By Daniel Sparks – Nov 5, 2021 at 2:25PM

Key Points

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The company's third-quarter report missed the market on several key metrics.

What happened

Shares of Switch (SWCH) tumbled on Friday. As of 1:10 p.m. EDT, the stock was down more than 11%.

Investors are likely disappointed in the data center operator's third-quarter results, which featured revenue and earnings per share that were below analysts' consensus forecasts. In addition, management's move to lower its full-year 2021 revenue guidance may have spooked investors.

A chalkboard sketch of a chart showing a stock price falling.

Image source: Getty Images.

So what

Switch reported third-quarter revenue of $158.1 million, up from $128.8 million in the year-ago quarter. The tech company's adjusted earnings per share came in at $0.01 -- down from $0.05 in the year-ago quarter. Analysts, on average, were expecting revenue of $159.8 million and adjusted earnings per share of $0.04.

"We are pleased by the continued trend of organic revenue acceleration and strong sales performance in the third quarter and year-to-date 2021 periods," said Switch chief financial officer Gabe Nacht in the company's earnings release.

Switch's lowered revenue guidance was likely also a disappointment for some investors. Management said it now expects full-year revenue to be between $563.5 million and $566.5 million. Previously, management was expecting full-year revenue between $566 million and $574 million.

Now what

Explaining its lowered view for revenue, management said in the company's third-quarter earnings release that it was due to lower-than-expected "contribution from pass-through power revenue during the second half of 2021, in addition to a modest timing difference in customer deployments relative to prior expectations."

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Switch. The Motley Fool has a disclosure policy.

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