Someone wrote recently on the board (sorry, I don’t remember who) that computer trading has added to all these wild swings in price. The computer reads “Revenue misses” or “Earnings miss” and immediately sells vast amounts of stock (or buys on a reverse scenario).
I was thinking that this must account for some of what has recently gone on with Ubiquiti. Put the figures I’m about to give you in the context that this company lost 20% of its market capitalization in a day or two after posting the following results:
Their revenues were $213.5 million. This was UP, not down, and up from $162 million the year before. This was organic gain, not due to an acquisition, and was up 32% from that $162 million. And on the basis of this Ubiquiti lost 20% of its market capitalization.
Well its earnings must have been way down? Actually it made 72 cents. This was UP, not down, and up from 58 cents the year before. This was up 24%, not down anything! And on the basis of this it lost 20% of its market capitalization.
And its gross margins fell from 48% to 44%…ooooh! for one time reasons the CEO enumerated and spelled out clearly. And on the basis of this Ubiquiti lost 20% of its market capitalization.
Well maybe its guidance was terrible? Well its revenue guidance was $210 to $220 million. That’s pretty terrible, right? Well they year before they had $167 million. And on the basis of this it lost 20% of its market capitalization.
Earnings guidance must have been way down then? They guided to 73 to 79 cents. Awful! Let’s see, the year before they had 63 cents. That’s down… Oh no, it’s UP 20.6% at the mid-point and up 25% at the top of the range. And we all know that they put it up as a value that they know they’ll beat. And on the basis of these terrible results, and horrible guidance, Ubiquiti lost 20% of its market capitalization.
Does that make any sense to you? Really?