Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of online family history resource Ancestry.com
So what: Ancestry.com's fourth quarter managed to top estimates, but a weak subscriber outlook -- management expects just 12.4% growth in 2012 versus 22% in the year before -- clearly shows that its breakneck growth is slowing considerably. On top of that, the cost to attract those subscribers is also rising, triggering fresh concerns over its long-term profitability, as well.
Now what: Looking ahead, management sees 2012 revenue of $455 million-$470 million, versus Wall Street's estimate of $464.3 million. "We believe we are making great strides on building out our product, and we are particularly excited about some of the innovations we expect to deliver in 2012 as we continue working to enrich the family history experience for our subscribers," said CEO Tim Sullivan. With the stock now down 50% from its 52-week high and trading at a reasonable forward P/E of 12, buying into that optimism might not be a bad idea.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Ancestry.com. Try any of our Foolish newsletter services free for 30 days.