Why Shares of Impinj Tumbled Today

What happened

Shares of Impinj (NASDAQ: PI) slumped on Friday after the provider of radio-frequency identification solutions fell well short of analyst expectations when it reported its fourth-quarter results. The stock tanked earlier this month when Impinj provided disappointing preliminary results, which actually turned out to be overly optimistic. Impinj stock was down about 19.5% at 11:55 a.m. EST.

So what

Impinj reported fourth-quarter revenue of $26.9 million, down 20% year over year and about $2.6 million below the average analyst estimate. This was also below the $29 million-$30 million range the company provided when it reported preliminary results. Impinj blamed a partner's request for a one-time product exchange, which will push some revenue into the first quarter.

A man in a gray suit holding his head with his hands as he looks at a slumping stock chart.

Image source: Getty Images.

Non-GAAP earnings per share came in at a loss of $0.28, down from a profit of $0.11 in the prior-year period and $0.09 shy of analyst expectations. Lower revenue and a jump in operating expenses pushed down the bottom line.

Impinj CEO Chris Diorio tried to find a silver lining: "Our fourth quarter revenue included strong fixed-reader unit-volume growth of 42% year-over-year... We remain confident in our market opportunity, position, and in our vision of identifying, locating and authenticating every item in our everyday world, and connecting every one of those items to the cloud."

Now what

Impinj expects weak endpoint IC volumes during the first quarter due to shortened lead times and ongoing reductions in partner inventory. The company expects revenue between $23.25 million and $25.25 million, along with a non-GAAP per-share net loss between $0.35 and $0.42.

Shares of Impinj are now down about 82% from their 52-week high. With revenue and profits moving in the wrong direction, investors are no longer willing to award the stock a premium valuation.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.