Why Fusion-io Shares Tanked

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 Fusion-io (NYS: FIO) have tanked today by as much as 10% after the company reported fiscal first quarter earnings, and its conservative guidance spooked investors.

So what: The company posted record revenue of $118.1 million, representing growth of 59% from a year ago. Net income came in at $3.9 million, or $0.04 per share. That was down from a year ago, largely due to increased stock-based compensation expenses.

Now what: Fusion-io sees second quarter sales to be flat sequentially, with full-year revenue expected to grow between 45% and 50%. That soft guidance has left investors wanting more, while analysts are split over whether there's cause for concern. Benchmark called the outlook "comically" conservative and said the drop was a buying opportunity. Pacific Crest agrees that investors should pick up shares on the weakness. Goldman Sachs thinks the pessimism is warranted though, saying macro conditions could weigh on future results.

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The article Why Fusion-io Shares Tanked originally appeared on Fool.com.

Evan Niu, CFA, has no positions in the stocks mentioned above. The Motley Fool owns shares of Fusion-io. Motley Fool newsletter services recommend Goldman Sachs. 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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