Why LightInTheBox Shares Got Walloped

Why LightInTheBox Shares Got Walloped

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 Chinese online retailer LightInTheBox plummeted 37% today after its quarterly results and outlook missed Wall Street expectations.

So what: The stock has soared since its June IPO on high growth expectations, but today's Q2 results -- EPS of $0.10 topped estimates but revenue of $72.2 million missed by about $4 million -- coupled with downbeat guidance for Q3 is forcing Mr. Market to quickly sober up. Management blamed the disappointing report simply on its product mix -- too much focus on higher-end apparel -- but Wall Street is, instead, reading it as a signal of slowing growth going forward.

Now what: For the current quarter, management now sees revenue of $68 million to $70 million, well below the consensus of $78.5 million. "We are confident we will be able to further expand our online retail market position by delivering better customer value proposition and shopping experience," Chairman and CEO Alan Guo reassured investors. "[W]e are confident we can deliver balanced growth and higher levels of profitability in the quarters ahead." Given LightInTheBox's still very speculative nature, however, I wouldn't be so quick to bet on it.

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The article Why LightInTheBox Shares Got Walloped originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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