Why Violin Memory Shares Plunged (Again)
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 Violin Memory fell more than 16% after reports confirmed the company's chief technical officer has resigned. What's more, additional rumors are circulating that Violin Memory CEO Donald Basile could be leaving as well.
So what: Today's news comes on the heels of last month's harrowing 48% stock plunge, which was spurred by Violin Memory's terrible first earnings report as a publicly traded company. In that report, Violin revealed a massive $34.1 million generally accepted accounting principles loss and weak forward guidance, fueling worries regarding just how long its dwindling $134 million cash pile will last.
To make matters worse, the company also has its hands full fending off a slewofshareholderlawsuits, with most alleging Violin breached its fiduciary duty by not adequately informing investors of challenges stemming from the U.S. government shutdown leading up to its September IPO.
Now what: As it stands, and even with shares trading 71% below its $9 IPO price and 63% below its first-day close, I think investors would still be wise to steer clear of the stock. Once again, until Violin Memory can prove it has what it takes to achieve sustainable top-line growth and profitability over the long term, you'll find me watching from the sidelines.
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The article Why Violin Memory Shares Plunged (Again) originally appeared on Fool.com.
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