Personal Finance

Infinera Stock Rebounds After Earnings Sell-Off

Ethernet cable with fiber optics in the background

What happened

Shares of Infinera (NASDAQ: INFN) have rebounded today, up by 8% as of 3 p.m. EDT, following a sell-off yesterday  that came in response to first-quarter earnings. Investors may realize they overreacted.

So what

First-quarter earnings results had topped expectations, and guidance for the second quarter also came in above the consensus estimate. Yesterday's drop could have potentially been driven by some comments from CEO Thomas Fallon on the earnings call, when Fallon noted that many of Infinera's larger competitors have been very aggressive on pricing lately.

Ethernet cable with fiber optics in the background

Image source: Getty Images.

Fallon made it clear that Infinera wasn't overly concerned, but the comments could have still rattled investors. "And we're seeing very, very aggressive pricing from some of the larger guys," Fallon had said. "I don't raise it up because it scares us to death, I raise it up because it is a little bit of a new dynamic and I think that there is a little bit of a land grab mentality going on."

Now what

Shares lost 20% of their value yesterday, despite the fact that many of Infinera's pertinent metrics are starting to improve . For the second quarter, the company said sales should be in the range of $203 million to $213 million, while analysts would have been happy with just $203.4 million in revenue.

For the latter half of the year, Fallon is "cautiously optimistic" that Infinera will be able to grow. The company is "on track" to be profitable and post positive operating cash flow for the second half of 2018.

10 stocks we like better than Infinera

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Infinera wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of May 8, 2018

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool recommends Infinera. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

INFN

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More