Cogent Communications Group Shares Plunged: What You Need to Know
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 Internet company Cogent Communications (NAS: CCOI) fell 19% today after one of its customers was shut down by the Feds.
So what: Megaupload.com was raided and shut down by the FBI in a crackdown of copyright infringement. According to the Department of Justice Megaupload leased about 36 servers from Cogent and paid the company about $1 million per month for its services.
Now what: Analysts say the company provided 2% to 3% of Cogent's revenue and first quarter revenue could decline as a result of today's shut-down. Considering the relatively small slice of revenue the drop looks pretty extreme for Cogent's shares. I think they'll bounce back when we get more answers and see today as a nice buying opportunity.
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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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.
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