Why Shares of TriNet Group Inc Plunged 44% Today

Earnings season hasn't been kind to TriNet Group Inc.

Travis Hoium
Travis Hoium
Aug 4, 2015 at 12:18PM

What: Shares of TriNet Group Inc (NYSE:TNET) plunged as much as 44% today after the company reported disappointing second-quarter earnings.

So what: Revenue of $122 million fell well short of the $137.6 million analysts expected from TriNet. Earnings of $0.14 per share was barely half of the $0.27-per-share bar Wall Street had set. This is the second quarter in a row the company has missed expectations by a wide margin.

Now what: Management had been investing in a growing sales force, which contributed to higher costs, but that investment hasn't yet affected the top line. What they attributed the earnings miss to was higher-than-expected medical costs. The company is exploring alternatives to increase visibility, but the market wasn't buying the excuses today. I like to see sales investments show traction before jumping in, but long-term I think this could be a nice discount for new investors.