Why Constant Contact Shares Plunged

Before you go, we thought you'd like these...
Before you go close icon

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 email marketer Constant Contact (NAS: CTCT) have plunged today by as much as 15% after the company announced an acquisition while also reducing its full-year guidance.

So what: Constant Contact has acquired privately owned SinglePlatform, a smaller company that helps small businesses get discovered through Web and mobile searches. Constant Contact paid $65 million in cash, plus another $5 million in cash and equity compensation for employee retention. If SinglePlatform hits certain revenue targets, Constant Contact will also have to pay an additional $10 million to $30 million.


Now what: Following the transaction, Constant Contact has updated its guidance. Second-quarter revenue shouldn't see any material impact, but the company will incur $1 million in acquisition-related expenses. SinglePlatform is expected to contribute about $1 million in revenue throughout the full year, and reduced its adjusted EBITDA forecast from a prior range of $45.8 million-$46.9 million to a new ballpark of $35.4 million-$36.7 million.

Interested in more info on Constant Contact? Add it to your watchlist byclicking here.

At the time this article was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners