2. Source: Wikimedia Commons. These 3 tech stocks fell hard
this week
3. Tableau's second- quarter results failed to impress
investors. You can tell when this happened, right?
4. Tableau's sales rose 65% year over year to $159 million.
Analysts wanted $141 million. Earnings increased 40% to $0.07 per
share. The Street view called for $0.05 per share. Management also
raised full-year revenue guidance by 3%, exceeding then-current
analyst targets by a hair. Bad data?
5. So let's see here... Tableau beat analyst estimates across
the board, showing fantastic growth everywhere. The company also
raised guidance to complete the classic "beat-and-raise" trope. All
that, and shares still plunged 14% the next day? What does it take
to impress people in this town? Tough crowd tonight, eh?
6. That being said, Tableau shares had doubled during the 52
weeks leading up to this report. Even after this crash, the stock
still trades at a lofty 166 times trailing earnings. The stock was
priced for absolute perfection. What it delivered in the second
quarter was great but not perfect. The earnings surprise was
smaller than usual, dadgummit! Some investors took profits, others
just lost faith in Tableau's growth story. These things happen.
Quick correction
7. Didn't we see this chart already? Nope -- this is actually a
weekly graph for VASCO Data Security.
8. The trigger event is, of course, much the same. VASCO's
second quarter didn't measure up to lofty expectations. Sales rose
37% year over year to $65.4 million, edging past the Street's $64.7
million target. Earnings more than doubled to $0.35 per share,
$0.07 ahead of the analyst consensus. However, management didn't
raise guidance targets. Instead, they reiterated existing revenue
guidance, and analysts had already crowded their estimates near the
top end of that $230 million to $240 million range. Look out below!
Here comes a 23% single-day plunge! What's going on?
9. Like Tableau, VASCO came into this week's report on a full
head of steam. However, share prices had already been reduced to
24% below recent highs, as the company's anti-fraud products were
found to have been sold to Iranian customers. Today, VASCO shares
trade at 19 times trailing earnings. Last December, the P/E ratio
stood at more than 47 times trailing earnings. Did VASCO deserve
this quick conversion from market-darling growth stock to shunned
value play? I don't see it. There's still plenty of rocket fuel
left in VASCO's growth engines. Another knee-jerk overreaction
10. Yelp is a different story -- at least in the long run.
11. Sure, Yelp fell on disappointing quarterly results, just
like VASCO and Tableau did. But there was no mysterious
overreaction to fundamentally impressive results this time. On the
bright side, second-quarter sales jumped 51% above the year-ago
result, landing at $134 million. That was just ahead of analyst
estimates. But on the bottom line, Wall Street wanted earnings of
$0.01 per share, down from $0.04 per share a year ago. Instead,
Yelp reported a $0.02 net loss per share. What's different this
time?
12. The hyper-local advertising expert also issued
disappointing full- year revenue guidance. And that's still not
all. In a conference call with analysts, Yelp CFO Robert Krolik
admitted that he's having a hard time hiring qualified salespeople
-- a serious problem for a company that lives and dies by its sales
force. Moreover, advertisers are sliding away from Yelp's service,
increasingly preferring other online marketing platforms. And in
the end, none of these doom-and-gloom data points are terribly
surprising. Yelp has been showing symptoms of poor user loyalty for
a while now, and the stock has responded by falling 52% in 2015. No
mercy rule
13. If VASCO and Tableau look like misunderstood growth stories
right now, then Yelp is more like a broken business model that's
reaching its operating limits. The stock may have fallen
dramatically in recent quarters, but Yelp still trades for 99 times
trailing earnings. Yelp's growth engines are running out of steam,
and investors have adjusted the stock price accordingly. In the
long run, I would not be surprised at all if Yelp's shares drop all
the way to zero value. At best, some larger social networking
operator might buy out the company at a steep discount to current
prices. In my book, there's simply no way the Yelp story ends well.
The final chapter?
14. Don't be too late to the party -- click here for one stock
to own when the Web goes dark.