What Happened?
Shares of internet service provider Cogent Communications (NASDAQ: CCOI) fell 28.5% in the morning session after the company reported disappointing third-quarter results that fell short of revenue and EBITDA expectations. The internet service provider posted revenue of $241.9 million, representing a 5.9% decrease year-on-year and missing Wall Street's forecasts. Although the company's GAAP loss of $0.87 per share was narrower than analysts had anticipated, this was overshadowed by the weak top-line performance. Furthermore, Cogent missed expectations for Adjusted EBITDA, a key measure of profitability. Investors appeared to focus on the declining sales and weaker-than-expected profitability, signaling concerns about the company's near-term business outlook.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Cogent? Access our full analysis report here.
What Is The Market Telling Us
Cogent’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Cogent and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 27 days ago when the stock dropped 3.4% on the news that President Trump threatened a 'massive increase in tariffs' on Chinese imports, reigniting fears of a renewed US-China trade war. The unexpected comments, made in response to Beijing's plans to tighten export controls on rare-earth minerals, reversed early market gains and sent major indices tumbling. Rare-earth minerals are crucial for components used in the electronics and automotive industries. The tech sector led the losses, with the tech-rich Nasdaq Composite falling 1.7%. The threat jolted Wall Street, sparking concerns that escalating trade tensions could disrupt global supply chains and increase costs for many technology companies that rely on components or manufacturing from China.
Cogent is down 66.8% since the beginning of the year, and at $25.62 per share, it is trading 70% below its 52-week high of $85.35 from November 2024. Investors who bought $1,000 worth of Cogent’s shares 5 years ago would now be looking at an investment worth $473.66.
P.S. In tech investing, "Gorillas" are the rare companies that dominate their markets—like Microsoft and Apple did decades ago. Today, the next Gorilla is emerging in AI-powered enterprise software. Access the ticker here in our special report.
