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Why Vonage Holdings Corp. Stock Fell 16% Today

Vonage's logo, orange and blue on white.

What happened

Shares of Vonage Holding (NYSE: VG) fell as much as 15.9% lower on Wednesday morning, hampered by a mixed earnings report. As of 11:20 a.m. EST, the stock had recovered to a smaller 14.4% drop.

So what

The digital-communications expert's fourth-quarter earnings tripled year over year, to $0.09 per share, meeting Wall Street's consensus expectations. On the top line, sales rose 3%, to $254 million, missing the Street's targets by a rounding error. Looking ahead, Vonage's management issued revenue guidance of roughly $1.04 billion for full fiscal year 2018, just above analysts' projections of $1.03 billion.

Vonage's logo, orange and blue on white.

Image source: Vonage.

Now what

Of course, Vonage's plunge doesn't exist in a vacuum. As of last night, the stock had soared 25% higher since the last earnings report and 62% higher over the previous 52 weeks . Investors were expecting something better than a simple in-line report with a single-digit target for revenue growth in 2018. Call it a correction.

Taking a longer view, Vonage's business-class services just passed the waning consumer division's revenue contribution in the fourth quarter and will remain the company's main focus in the years ahead. The loss of low-margin consumer subscriptions is hurting the top line these days, but that trend should reverse as Vonage's business-focused strategy matures. This stock may have been overdue for a correction, but I like where Vonage is going and would consider this drop as a potential buying opportunity.

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Anders Bylund 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 .

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.

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