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 Indian travel service MakeMyTrip (NASDAQ:MMYT) were making an emergency landing today, falling as much as 28% after the company badly missed estimates.
So what: The company took a big hit on currency translation as revenues grew 26% in constant dollars but only 4% with exchange rates factored in. Profit for the quarter was just $0.03 a share, down from $0.04 in the quarter a year ago, and just half of the $0.06 analysts were expecting. CEO Deep Kalra blamed "difficult operating conditions" and the uncertainty of the domestic airline industry. Without adjustments, the company actually posted a loss of $1.2 million for the quarter, and its revenue growth forecast for the year was cut by about half.
Now what: The online travel industry is a tough space to play, as there is little differentiation between competitors other than brand recognition. Consequently, I would be reluctant to invest in a company like MakeMyTrip even if it were performing well. Investors may be heartened by the solid top-line growth in constant dollars, but MakeMyTrip needs to make more than just pennies per share in profit if it wants to command a stock price north of $10.
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Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.