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Why Did 58.com Inc. (WUBA) Stock Plunge 14% Today?
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Shares of 58.com Inc. closed down 14% on Thursday after the company announced its Q2 earnings, in which it missed revenue expectations and lowered its Q3 guidance.
Based in Beijing, China, WUBA is an online marketplace serving local merchants and consumers in China. The company offers housing rental, recruitment, second-hand product, travel, catering, entertainment, and group-buying information. Some refer to it as China’s Craigslist.
The company posted $0.15 in earnings per share and revenue of $297.8 million. Although revenue increased 86.7% year-over-year, it missed street estimates by $5.6 million. However, WUBA’s EPS beat street expectations by $0.26.
“Despite the slowdown in China's economy, we continue to see overall growth in user and merchant numbers as well as revenues. We believe there is still significant room for growth as businesses shift from offline to online, whether it be consumers searching for information or merchants using the internet to market their services and attract potential customers” said Michael Yao, Chairman and CEO.
The increase in WUBA’s total revenue came from the consolidation of Ganji, an industry rival, and Anjuke, an online secondhand real estate platform, as well as organic growth. The main disappointment came from the company’s Q3 guidance, which it now sees at between $304 and $311 million. This is notably below Wall Street expectations of $343 million, according to an estimate from Thomson Reuters.
WUBA’s woes present a stark contrast from the recent successes of both Alibaba (BABA - Free Report) and JD.com (JD - Free Report) , fellow e-commerce peers in the People’s Republic of China. These companies saw their stocks surge after strong earnings reports.
Although investors might be spooked by the lowered guidance, the company could be worth keeping an eye on in the future. As more Chinese people gain internet access and see a continued boost in discretionary income, companies like WUBA could be poised for further growth.
Regardless, investors should remain wary of macroeconomic concerns in China as well as the potential rise of new industry rivals.
58.com currently sits at a Zacks Rank #3 (Hold).
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Why Did 58.com Inc. (WUBA) Stock Plunge 14% Today?
Shares of 58.com Inc. closed down 14% on Thursday after the company announced its Q2 earnings, in which it missed revenue expectations and lowered its Q3 guidance.
Based in Beijing, China, WUBA is an online marketplace serving local merchants and consumers in China. The company offers housing rental, recruitment, second-hand product, travel, catering, entertainment, and group-buying information. Some refer to it as China’s Craigslist.
The company posted $0.15 in earnings per share and revenue of $297.8 million. Although revenue increased 86.7% year-over-year, it missed street estimates by $5.6 million. However, WUBA’s EPS beat street expectations by $0.26.
“Despite the slowdown in China's economy, we continue to see overall growth in user and merchant numbers as well as revenues. We believe there is still significant room for growth as businesses shift from offline to online, whether it be consumers searching for information or merchants using the internet to market their services and attract potential customers” said Michael Yao, Chairman and CEO.
The increase in WUBA’s total revenue came from the consolidation of Ganji, an industry rival, and Anjuke, an online secondhand real estate platform, as well as organic growth. The main disappointment came from the company’s Q3 guidance, which it now sees at between $304 and $311 million. This is notably below Wall Street expectations of $343 million, according to an estimate from Thomson Reuters.
WUBA’s woes present a stark contrast from the recent successes of both Alibaba (BABA - Free Report) and JD.com (JD - Free Report) , fellow e-commerce peers in the People’s Republic of China. These companies saw their stocks surge after strong earnings reports.
Although investors might be spooked by the lowered guidance, the company could be worth keeping an eye on in the future. As more Chinese people gain internet access and see a continued boost in discretionary income, companies like WUBA could be poised for further growth.
Regardless, investors should remain wary of macroeconomic concerns in China as well as the potential rise of new industry rivals.
58.com currently sits at a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>