What Happened?
Shares of communications platform-as-a-service company Bandwidth (NASDAQ: BAND) fell 13.4% in the pre-market session after the company reported underwhelming fourth-quarter results: its revenue guidance for next year suggests a significant slowdown in demand, and it fell short of Wall Street's estimates. On the other hand, Bandwidth's revenue outperformed Wall Street's estimates. Overall, this quarter could have been better, as the solid revenue performance was overshadowed by a weaker demand outlook for next year.
The shares closed the day at $17.47, down 4.5% from previous close.
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What The Market Is Telling Us
Bandwidth’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. But moves this big are rare even for Bandwidth and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock gained 19.2% on the news that the company reported a "beat and raise" quarter. Specifically, it was great to see Bandwidth's optimistic revenue guidance for the next quarter, which exceeded analysts' expectations. Full-year revenue guidance was raised. Its revenue, adjusted EBITDA, and EPS also outperformed Wall Street's estimates during the quarter. Overall, we think this was a strong quarter that should satisfy shareholders.
Bandwidth is up 7.5% since the beginning of the year, but at $17.97 per share, it is still trading 21.3% below its 52-week high of $22.82 from July 2024. Investors who bought $1,000 worth of Bandwidth’s shares 5 years ago would now be looking at an investment worth $236.17.
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