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 Chinese social networking company Renren (NYSE:RENN) sank 13% today after its quarterly results and outlook disappointed Wall Street.
So what: The stock had plunged sharply in recent weeks on concerns over continued revenue weakness, and today's Q4 results -- operating loss of $42.6 million on a revenue decline of 29% -- coupled with downbeat guidance only confirm those headwinds. In fact, Renren's monthly active users dropped 20% to 45 million in December while gross margin plunged to 42.2% from 59.6% in the year-ago period, prompting investors to jump ship on the expectation of even further declines ahead.
Now what: Management now expects Q1 revenue of between $23 million and $25 million, representing as much as a 45% decline over the year-ago period. "Looking into 2014, we will further invest in our core business and cement our strength in China's university and young user demographics, a segment we have always served best," Chairman and CEO Joseph Chen reassured investors. "We aim to continue to build the intrinsic value of our company assets that can bring long-term, sustainable value to our shareholders." Given Renren's still-pristine balance sheet and beaten-down stock price -- now off about 30% from its 52-week highs -- the downside might even be limited enough to bet a bit on that bullishness.
Brian Pacampara has no position in any stocks mentioned, and neither does The Motley Fool. 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.