During a down day for tech stocks, some names across the industry were getting especially crunched after delivering disappointing earnings reports.
Among tech’s biggest losers in Thursday’s session were optoelectronics companies Infinera Corp. INFN, -24.21% and Applied Optoelectronics Inc. AAOI, -10.20% crafts marketplace Etsy Inc. ETSY, -9.75% ad marketplace The Trade Desk Inc. TTD, -12.15% , and freelance marketplace Upwork Inc. UPWK, -13.23%
“We’re nervous about Infinera,” wrote Jefferies analyst George Notter of a quarter in which he saw “big red flags.” The company missed Wall Street’s revenue expectations by about 6% while reporting a narrower loss than analysts had expected.
Concerning to Notter are that Infinera’s cash burn “is more significant than anticipated and the company isn’t answering balance-sheet questions very crisply.” Infinera burned $58 million in cash during the first quarter, he wrote, and while management seems to expect that trend to flip positive in the fourth quarter, Notter models a cash-breakeven point that’s farther out. The company also announced that its chief financial officer would be leaving the company.
He has a hold rating on shares, which were off 25% in midday trading.
See also: Green Dot slides toward worst day since 2012 after ‘disconcerting shift’ in outlook
Peer Applied Optoelectronics delivered a downbeat outlook for the quarter and saw its stock drop as well on Thursday. Needham analyst Alex Henderson sees a “long road ahead” for the company and commented that management seems to have low visibility into the second half of the year.
“While at some point normal datacenter investment will likely return as inventory gets worked through, we find visibility into CY2H murky at best,” wrote Henderson, who rates the stock at hold.
Applied Opto shares were down more than 12% in Thursday’s session.
Analysts appeared to be more cheery about Etsy after a mixed report from the marketplace company, but shares fell 11%.
“Etsy delivered another quarter of [gross merchandise sales] growth above expectations and saw a strong finish to the quarter despite weakness in January to February, but investors were looking for more from results and full year guidance,” wrote Wedbush’s Ygal Arounian. “Investors are looking for a path to continued acceleration of GMS growth and may not be seeing it here with comps getting increasingly difficult, a challenging scenario for shares trading at a premium.”
Still, he said that Etsy “continues to impress us with its pace of product enhancements,” which seem to be boosting GMS. Arounian has a neutral rating on the stock.
See also: Roku stock surge adds another $100 million to short sellers’ paper losses this year
Upwork fell a bit short with its marketplace revenue and gross services volume, said Jefferies analyst Brent Thill, but the slowness was “generally expected,” in his view. “As noted last quarter, reasons included tough comparisons from the past launch of a U.S. domestic marketplace and spreading out of marketing spend instead of upfront,” he wrote.
The second quarter is also expected to be slow, Thill wrote, but there’s room for improvement later in the year. He has a hold rating on shares, which are down more than 10% in Thursday trading.
Shares of ad company The Trade Desk have flown high this year, but they came down about 11% in Thursday trading. “All in, fundamentals were mixed for TTD in Q1,” wrote RBC’s Mark Mahaney, who rates the stock at outperform and hiked his target price to $220 from $195. The company saw a deceleration in revenue growth for the March quarter but delivered a June outlook that came in a bit ahead of what analysts were expecting.
The stock is still up roughly 70% on the year.
Add Comment