Why ServiceSource Shares Served Up Big Gains

Is this meaningful? Or just another movement?

Alex Planes
Alex Planes
Feb 8, 2013 at 5:27PM
Technology and Telecom

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 ServiceSource International (NASDAQ:SREV) have gained over 11% today, in an apparent overreaction to yesterday's overreaction to its earnings report.

So what: As my colleague Evan Niu noted yesterday, both ServiceSource's top and bottom lines beat the Street's consensus. However, Piper Jaffray analyst Mark Murphy noted that the growth in contract value was, at 13%, lower than the company's own guidance range of 15% to 17%. The market may have also freaked out about the company's CFO change, but that seems to have been forgotten today.

Now what: Nothing's changed since ServiceSource posted its earnings after the close two days ago. In fact, shares are now almost exactly the same price today that they were at their high point just before the earnings release. The market seems confused by this company's potential, which makes it a risky play right now. Dig deeper to find out what's really going on before you decide to invest.

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