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.
Steve Symington owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.