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What: Shares of Violin Memory (NYSE:VMEM) fell more than 16% after reports confirmed the company's chief technical officer has resigned. What's more, additional rumors are circulating that Violin Memory CEO Donald Basile could be leaving as well.
So what: Today's news comes on the heels of last month's harrowing 48% stock plunge, which was spurred by Violin Memory's terrible first earnings report as a publicly traded company. In that report, Violin revealed a massive $34.1 million generally accepted accounting principles loss and weak forward guidance, fueling worries regarding just how long its dwindling $134 million cash pile will last.
To make matters worse, the company also has its hands full fending off a slew of shareholder lawsuits, with most alleging Violin breached its fiduciary duty by not adequately informing investors of challenges stemming from the U.S. government shutdown leading up to its September IPO.
Now what: As it stands, and even with shares trading 71% below its $9 IPO price and 63% below its first-day close, I think investors would still be wise to steer clear of the stock. Once again, until Violin Memory can prove it has what it takes to achieve sustainable top-line growth and profitability over the long term, you'll find me watching from the sidelines.
Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.