Why Shares of Impinj Are Crashing Today

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What happened

Shares of radio-frequency-identification solutions provider Impinj (NASDAQ: PI) sank on Thursday following a disappointing third-quarter report. The company missed analyst estimates for earnings and provided guidance that left a lot to be desired. The stock was down about 35% at 11:20 a.m. EDT.

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So what

Impinj reported third-quarter revenue of $32.6 million, up 5% year over year and in line with the average analyst estimate. The company slashed its full-year guidance in August, citing customer delays. Impinj now expects to see a slight decrease in integrated circuit (IC) volumes during the second half of the year, implying a rough fourth quarter.

Non-GAAP EPS came in at a loss of $0.08, down from a profit of $0.10 in the prior-year period and $0.05 lower than analysts were expecting. A GAAP net loss of $0.23 per share was down from a profit of $0.01 in the third quarter of 2016. GAAP operating expenses soared 39% year over year, driving down the bottom line.

For the fourth quarter, Impinj expects to produce revenue between $28.25 million and $29.75 million, down from $33.7 million in the fourth quarter of 2016. Non-GAAP EPS is expected to be a loss of $0.16 to $0.24, down from a profit of $0.11 in the prior-year period.

Now what

Impinj CEO Chris Diorio pointed to the company's long-term opportunity: "We see indicators of growing adoption for RAIN, and the Impinj platform, however, we expect to see a slight decrease in endpoint IC volumes in the second half of the year. We remain confident in our market opportunity and will continue investing in and delivering solutions and enterprise partnerships that leverage our platform, accelerate adoption and drive scale in this gigantic market opportunity."

With Impinj predicting a substantial revenue decline during the fourth quarter, investors are seriously reevaluating the company's growth prospects. Impinj carved out a new 52-week low on Thursday, and further declines are possible if revenue keeps moving in the wrong direction.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.