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 Wayfair, (NYSE:W) dropped 12% Tuesday after the online home furnishings and decor specialist announced stronger-than-expected third-quarter results, but followed with disappointing fourth-quarter guidance.
So what: Quarterly revenue increased increased 41.7% year-over-year to $336.2 million, including 57.1% growth in direct retail revenue to $285.5 million. This translated to an adjusted net loss of $0.29 per share. Analysts, on average, were expecting a loss of just $0.38 per share on sales of $308.6 million.
However, in the follow-up conference call, Wayfair management told investors to expect current quarter revenue in the range of $355 million to $370 million, the mid-point of which sits just below analysts' expectations for fourth-quarter sales of $365.7 million.
Now what: For what its worth, note Wayfair stock climbed 8% in yesterday's trading in anticipation of the announcement, which marks the company's first earnings report since going public last month. In short, the combination of typical post-IPO volatility and profit-taking makes today's plunge seem much less significant.
All things considered, investors will want to keep an eye on Wayfair's decelerating growth going forward, but this was a solid quarter nonetheless. At the very least, I think Wayfair stock would be worth adding to your watch lists.