FriendFinder Shares Plunged: 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: Shares of adult website operator FriendFinder Networks (NAS: FFN) were losing stock market friends today as investors knocked shares down as much as 18% in intraday trading after the company reported disappointing second-quarter results.

So what: It's a pretty simple story here. Investors were expecting one thing from the company's second-quarter financials, and what the company delivered was decidedly worse. On the top line, quarterly revenue declined 1.4% from last year to $83.4 million. Net income was blasted into the red by debt-extinguishment costs and a legal settlement. Even backing out those charges though, it's likely that FriendFinder still would have reported a loss. Wall Street was expecting $0.14 in (positive!) per-share earnings on $87 million in revenue.

Now what: Though the results of the company's Internet division fell from last year, it appears to be a profitable, attractive business line. However, combine that with high overhead costs and a very hefty debt load and we're left with a company that I would rather not be pals with.
 

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At the time this article was published 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.Fool contributorMatt Koppenhefferdoes not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter@KoppTheFoolorFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

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