What Happened?
Shares of digital infrastructure investor DigitalBridge Group (NYSE: DBRG) fell 2.6% in the afternoon session after the company reported mixed third-quarter results that featured a significant revenue miss which overshadowed a strong earnings beat.
While DigitalBridge's adjusted earnings of 12 cents per share significantly surpassed Wall Street's expectations, its revenue story caused concern. The company posted revenue as low as $3.82 million for the period, falling drastically short of analysts' forecasts of over $100 million. This represented a 95% decline compared to the same quarter in the previous year. The major revenue shortfall was attributed to a "carried interest drag" during what was described as a "noisy quarter." Despite the positive earnings news, which included a 102% increase in distributable earnings, investors appeared to focus on the steep drop in sales, leading to the decline in the share price.
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 DigitalBridge? Access our full analysis report here.
What Is The Market Telling Us
DigitalBridge’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock dropped 6.1% on the news that new trade tensions and disappointing earnings from major tech companies weighed heavily on investor sentiment.
A key driver was the news that the White House is considering new restrictions on Chinese exports that use U.S. software, a move that could significantly impact technology companies. This uncertainty over escalating trade tensions created a broad sense of worry in the market. Simultaneously, shares of the semiconductor giant Texas Instruments dropped 6% after its latest earnings and future revenue forecast both came in weaker than expected, which is a big concern for the health of the tech industry. This poor performance from Texas Instruments immediately dragged down the entire semiconductor sector, causing other major chipmakers like Advanced Micro Devices and Micron Technology to also see significant declines.
Compounding the bad news, streaming service Netflix saw its stock slump 9% after it missed its earnings targets, partly blaming a tax dispute in Brazil. The combined effect of renewed trade war fears and the direct evidence of underperformance from influential companies in the technology sector was enough to push the major market indexes lower.
DigitalBridge is up 7.9% since the beginning of the year, but at $11.97 per share, it is still trading 23.7% below its 52-week high of $15.69 from October 2024. Investors who bought $1,000 worth of DigitalBridge’s shares 5 years ago would now be looking at an investment worth $815.22.
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