Why 58.com Inc. (ADR) Stock Plunged Today

Image source: 58.com Inc.

What:Shares of58.com Inc. (ADR)(NYSE: WUBA)were down 13% as of 11:00 a.m. EDT Thursday after the Chinese online classified ad specialist released mixed second-quarter 2016 results and followed with a disappointing outlook.

So what:Quarterly revenue grew 86.7% year over year, to $297.8 million, near the lower end of 58.com's guidance for revenue of $296 million to $303 million. That translated to adjusted net income of $21.7 million, or $0.15 per American depositary share (ADS), compared to an adjusted net loss of $20.8 million, or $0.19 per ADS in last year's second quarter.

Analysts, on average, were looking for an adjusted net loss of $0.11 per ADS but on higher revenue of $303.2 million.

Now what: In addition, for the third quarter, 58.com anticipates revenue between $304 million and $311 million, marking a decelerated year-over-year increase of 52% to 56%. Here again, analysts were modeling significantly higher Q3 revenue of $343.3 million.

"Despite the slowdown inChina'seconomy, we continue to see overall growth in user and merchant numbers as well as revenues," added 58.com CEO Mr. Michael Yao. "We believe there is still significant room for growth as businesses shift from offline to online, whether it be consumers searching for information or merchants using the internet to market their services and attract potential customers."

58.com CFO Mr. Hao Zhou also noted revenue and paying customers hit record highs in the second quarter, with the former growing faster than costs "demonstrating the scalability of our business."

Nonetheless, it's evident 58.com is feeling the pressure of China's macroeconomic woes. And given the company's impending deceleration in top-line growth, it's no surprise to see investors taking a step back today.

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