Here's Why Getty Images Stock Plunged This Week
What happened
Shares of stock-image company Getty Images (NYSE: GETY) plunged this week, according to data provided by S&P Global Market Intelligence. On Monday, the company reported preliminary financial results for the second quarter that disappointed investors. This is what started the decline for Getty stock. But it kept dropping this week and was down 16% as of noon ET on Friday.
Getty's second-quarter revenue of $225.7 million was lower than what Wall Street expected. And the company recorded a net loss of $4.3 million, which was quite different than its net income of $38.7 million in the same quarter last year. Granted, there was a one-time foreign exchange benefit boosting last year's numbers. But a loss this year is still a loss.
So what
Even numbers that were encouraging for Getty come with asterisks. For example, the company's active annual subscriber base more than doubled year over year. But these are mostly small accounts switching to a subscription from paying for downloads individually. Consequently, revenue fell 3% even though the subscriber base grew.
Moreover, Getty's free cash flow jumped 66% year over year to $27.9 million. But the jump was due to the timing of things on the cash flow statement.
In summary, there wasn't much to be excited about for Getty investors. That's why the stock has continued to drop.
Now what
One of the things hampering Getty's financial results is the ongoing writers strike in Hollywood. Considering it's uncertain when it will end, management lowered its full-year guidance from a range of $936 million to $963 million to a range of $920 million to $935 million.
Getty isn't going anywhere; this business is still viable. But as long as its growth is challenged, the stock will likely struggle to beat the market.
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Jon Quast 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.
