Vonage Shares Dropped: What You Need to Know

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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: After dropping off a cliff yesterday, then clinging to a sprig of tree a la Wile E. Coyote halfway down, Vonage Holdings (NYS: VG) lost its grip and slipped another 17% this morning.

So what: It's bounced back a bit since (Acme trampoline), and is down "only" 8% as of this writing.

Now what: But make no mistake -- the law of gravity will reassert itself. Nothing that was wrong with Vonage yesterday has changed today. Customer count is still stagnant-to-down. The price-to-free cash flow ratio is still too high for the growth rate. Free cash flow is still on the decline, and Vonage still has farther to fall.

Think Vonage can turn it around?Add the stock to your Fool watchlistand find out.

At the time this article was published Fool contributorRich Smithdoes not own (or short) shares of Vonage. The Motley Fool has adisclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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