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 TrueCar Inc (NASDAQ:TRUE) were down roughly 12% as of 1:30 p.m. Friday despite the company's earlier reporting better-than-expected fourth-quarter results and solid forward guidance.
So what: Quarterly revenue climbed 38% year over year to $55.5 million, which translated to adjusted net income of $300,000, or roughly break-even on a per-share basis. Meanwhile, adjusted earnings before interest, taxes, depreciation, and amortization rose to $4.3 million, compared to a loss of $300,000 in the year-ago period. Analysts, on average, were expecting roughly the same sales to result in a $0.01 per share adjusted net loss.
For the current quarter, TrueCar expects revenue of approximately $59 million, with adjusted EBITDA of $3.5 million-$3.8 million. For the full year, it sees revenue of $280 million-$290 million, with adjusted EBITDA of $26.6 million-$29.0 million. Both revenue ranges came in slightly ahead of Wall Street's models.
Now what: As fellow Fool Daniel Miller pointed out, however, investors were likely spooked by the fact TrueCar suffered a sequential decline in both unique visitors and units sold in the fourth quarter -- something TrueCar management noted during the subsequent conference call was merely the result of regular seasonality. Based on a more appropriate year-over-year comparison, TrueCar is still growing both metrics at a healthy clip.
In any case, I agree with my Foolish colleague that TrueCar's drop Friday appears to be unmerited in light of its solid results. At the same time, I think this could be a perfect opportunity for patient, long-term investors to add to or start a new position.
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.