Genome sequencing specialist Pacific Biosciences of California (NASDAQ:PACB) reported first-quarter 2021 financial results on Thursday afternoon that were right in line with analyst estimates. But in yet another example of a company falling sharply following a decent earnings report, shares of PacBio are down by 10.8% as of 12:48 p.m. EDT on Friday, after dropping by as much as 13.3% earlier in the day.
PacBio announced record first-quarter revenue of $29 million, an 86% year-over-year increase and exactly what analysts expected. Meanwhile, the company recorded a net loss of $87.4 million — or a net loss per share of $0.45 — compared to the net income of $1.3 million and net income per share of $0.01 it reported during the year-ago period. Analysts tracking the company had predicted that it would report a net loss of $0.46. Why aren’t investors satisfied with PacBio’s Q1 performance?
It could be that financial results that are right in line with analyst estimates just won’t cut it in today’s market in which richly valued equities are run-of-the-mill. Even after today’s sell-off, shares of PacBio have soared by 742.9% in the past year, and many investors have lofty expectations for the healthcare company considering its increasingly strong position in an industry that’s ripe for growth. Another possible explanation is simply that today is a bad day for stocks. As of this writing, all three major U.S. market indexes are down, and PacBio may be getting dragged along with the rest of the market.
Daily movements in the prices of securities don’t always make a whole lot of sense. And instead of looking for precise reasons for these daily changes, investors would do better to remember that patience is one of the keys to earning above-average returns in the long run. Regardless of the reasons behind PacBio’s losses on the market today, the company’s prospects remain intact, and for investors sold on the company’s long-term master plan, resisting the temptation to sell seems like the right move.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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