Why 21Vianet Group Inc. Stock Plunged Today

What happened

Shares of 21Vianet Group Inc. (NASDAQ: VNET  ) were down 15.1% as of 11:30 a.m. EST Thursday after the Chinese internet and data center service provider announced solid fourth-quarter 2016 results, but followed with disappointing guidance.

So what

Quarterly revenue fell 8.4% year over year, to 900.6 Chinese yuan, or roughly $129.7 million. Within that total, managed network services (MNS) revenue was 110.6 million yuan ($15.9 million), down from 228.7 million yuan in last year's fourth quarter. On the bottom line, that translated to an adjusted net loss of 66.1 million yuan ($9.5 million), or $0.60 per American depositary share (ADS), widened from an adjusted net loss of 29.1 million yuan, or $0.07 per ADS in the same year-ago period.

By comparison, analysts' consensus estimates called for a wider net loss of $0.14 per share.

Colorful data center mainframe


"Despite facing severe headwinds in our managed network services business," elaborated 21Vianet CEO Steve Zhang, "we continue to see stable growth in our core IDC, VPN, and cloud businesses this quarter."

Now what

For the current quarter, 21Vianet anticipates revenue in the range of 820 million yuan to 880 million yuan, the midpoint of which represents a 1.4% decline from 862.3 million yuan in last year's first quarter. By contrast, Wall Street was modeling 8.9% year-over-year growth for Q1.

Similarly, 21Vianet expects full-year 2017 revenue of 3.7 billion yuan to 3.9 billion yuan, the midpoint of which translates to roughly $550 million and represents 4.4% growth from fiscal 2016. Analysts, on average, were looking for higher 2017 revenue of roughly $588 million.

In the end, that doesn't rule out the possibility that 21Vianet's top-line guidance is conservative. But our market is a forward-looking machine, and it's no surprise to see shares pulling back today as investors anticipate 21Vianet's underwhelming growth.

10 stocks we like better than 21Vianet Group
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 tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now...and 21Vianet Group 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 February 6, 2017.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 4006704, ~/Articles/ArticleHandler.aspx, 3/25/2017 1:46:42 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
Change down DOW 20596.7 -59.9 -0.3%
Change down S&P 500 2344.0 -2.0 -0.1%
Change up NASD 5828.7 11.0 0.2%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

3/24/2017 4:00 PM
VNET $5.45 Down -0.25 -4.39%
21Vianet Group CAPS Rating: **