Shares of Intrexon Corporation (NYSE: XON) slipped as much as 12.9% on Friday morning and were down 7.9% as of 11:40 a.m. EDT due to a surprise delay in reporting its second-quarter financial results. The biotech was scheduled to announce its Q2 earnings results on Aug. 9, 2018, but instead said it wouldn't report the final results and would also delay the filing of its quarterly report to the Securities and Exchange Commission (SEC).
Intrexon stated that the delay was due to its implementation of the Accounting Standards Codification (ASC) Topic 606 regulations related to revenue recognition that went into effect on Jan. 1, 2018. The company said it would file its Q2 quarterly report "within the next few days" and would also be filing an amended Q1 report.
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Delays in filing quarterly reports are rare, but not totally unheard of. However, investors don't typically respond well to such surprises. The delay wasn't the only bad news for Intrexon, though.
The company provided preliminary unaudited Q2 results that didn't look so great. Intrexon stated that revenue in the second quarter will be around $45.3 million, well below Wall Street's expectation of $51.7 million. The biotech also expects to report a net loss in Q2 of $0.51 per share. The consensus analysts' estimate was for a net loss of $0.25 per share.
And there was more bad news. Intrexon found that it made errors in its Q1 report. The company estimates that it overstated deferred revenue and accumulated deficit by around $67 million in the first quarter. It also overstated revenue by roughly $4 million, an error that will also negatively affect Q1 earnings.
The net effect was that investors had to deal with the reality that Intrexon had a worse performance in the second quarter than they were counting on, and that the company's financial team has fumbled a bit. That's not a recipe for instilling confidence.
Assuming there are no more delays, Intrexon should quickly move past its mistakes in applying the new revenue recognition standards. While it caused the company some embarrassment, these errors aren't likely to be a big deal over the long run.
The more significant issue is that Intrexon's financial performance isn't getting better. Intrexon reported dismal numbers in its first-quarter update . Until the biotech can demonstrate that it has a clear pathway to growth, my view is that investors are better off avoiding this stock.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .