What happened
The stock market ended a rocky Thursday session generally higher. The Dow Jones Industrial Average rose by about 0.3%, the S&P 500 finished 1.5% higher, and the tech-heavy Nasdaq popped by 3.3%.
Despite the general outperformance of technology stocks, though, cloud communications company Bandwidth (BAND -0.97%) had a terrible day as its shares fell by 32.1%. In fact, the last time Bandwidth's share price was this low was in 2018.
NASDAQ: BAND
Key Data Points
So what
As you might expect, Bandwidth's move lower was driven by its fourth-quarter earnings report. But at first glance, that report might not seem too bad. The company beat analysts' estimates on both the top and bottom lines, and posted an adjusted profit when a small loss had been expected.
However, there's no recipe for a post-earnings drop that is quite as effective as offering weak guidance, and that's exactly what management did. Bandwidth is guiding for a loss in the $0.07 per share to $0.11 per share range in the first quarter, while the consensus projection from analysts had been for a $0.07 per share profit. Revenue guidance came in nearly $4 million shy of expectations at the midpoint. And guidance for the full year was weak for both the top and bottom lines as well.
Image source: Getty Images.
Now what
In simple terms, management expects Bandwidth's growth to slow in 2022. On a sequential basis, the company is forecasting flat revenue for the first quarter, and even the high end of its 2022 revenue guidance is calling for just 13% year-over-year growth. It's not surprising that these metrics wouldn't get investors too excited about a cloud services company that hasn't achieved consistent profitability yet.
