OpenTable 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 restaurant-reservation specialist OpenTable (NAS: OPEN) sank 15% on Wednesday after its third-quarter revenue came in below expectations.

So what: OpenTable's top-line miss was so worrisome -- revenues grew 40% to $34.4 million, but Wall Street was expecting $35.7 million -- that analysts are being prompted to significantly cut their price targets. While 40% top-line growth isn't anything to sneeze at, the soft economy, rising costs, and increasing competition from the likes of Google (NAS: GOOG) have investors seriously questioning OpenTable's prospects.

Now what: While the company didn't forecast any numbers for the fourth quarter, management did warn that a strong year-ago quarter would make comparisons tough. So, given that kind of uncertainty, which Mr. Market absolutely hates, the shares are likely to see plenty more pressure in the short term. Of course, with OpenTable now down a whopping 68% over the past six months alone, growth-seeking, enterprising investors might be a looking at a cheap long-term opportunity.

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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of OpenTable and Google. Motley Fool newsletter services have recommended buying shares of OpenTable and Google. 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 Fool's disclosure policy always gets a perfect score.

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