Why OpenTable Shares Got Crushed
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 online restaurant reservation service OpenTable (NAS: OPEN) plunged 16% on Wednesday after its quarterly results and outlook disappointed Wall Street.
So what: OpenTable's first-quarter profit managed to top estimates, but a small top-line miss -- $39.4 million versus the consensus of $39.6 million -- coupled with a disappointing full-year outlook is forcing investors to lower their growth estimates yet again. Weakness in its international business -- due in part to the slow integration of U.K.-based rival TopTable -- is weighing heavily on results in particular, triggering serious concerns over its long-term prospects.
Now what: Management now sees full-year revenue of $158 million-$164 million -- well below Wall Street's view of $168.2 million -- and expects its international business to record a loss. "We're focusing our efforts in areas that we believe position the business to realize the long-term opportunity in both our North America and International segments," reassured President and CEO Matt Roberts. Unfortunately, with a still-lofty P/E of roughly 40, I'd wait for much bigger pullback before buying into that bullishness.
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At the time this article was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. The Motley Fool owns shares of OpenTable.Motley Fool newsletter serviceshave recommended buying shares of OpenTable. Try any of our Foolish newsletter servicesfree for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.