Why Acacia Research's Shares Plunged

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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 patent troll Acacia Research (NAS: ACTG) fell as much as 15% today after the company released better-than-expected earnings.

So what: In the second quarter, revenue rose 27% to $50.5 million and earnings per share came in at $0.43. Analysts had estimated $42.2 million in revenue and $0.24 in earnings per share.


Now what: The results were much better than expected and shares are now trading at 12 times forward earnings estimates. The results were fairly good today so I wouldn't be a big seller. With that said, this business can be very volatile so I'm not buying on the dip just because I don't want the risk associated with the licensing business.

Interested in more info on Acacia Research? Add it to your watchlist byclicking here.

The article Why Acacia Research's Shares Plunged originally appeared on Fool.com.

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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