Why Similarweb Stock Is Plummeting Today

Similarweb (NYSE: SMWB) stock is heading lower in Wednesday's trading. The company's share price was down 8.7% as of 11:30 a.m. ET, and had been down as much as 16.9% earlier in the session.

Similarweb published its third-quarter results after yesterday's market close, reporting earnings that topped Wall Street's forecast but sales that came in short of expectations. The company also reiterated its full-year sales guidance and raised its non-GAAP (generally accepted accounting principles) adjusted operating profit forecast, but that hasn't been enough to prevent sell-offs.

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Similarweb stock slips on Q3 sales miss

For the third quarter, Similarweb posted adjusted earnings per share of $0.05 on sales of $71.79 million. For comparison, the average Wall Street analyst estimate had targeted adjusted per-share earnings of $0.02 on sales of $71.95 million. While the company's sales were up 11% year over year in the period, its customer base was actually up 15% compared to where it stood at the end of the prior-year period.

What's next for Similarweb?

For the full year, Similarweb reaffirmed that it anticipates sales to be between $285 million and $288 million. Meanwhile, the company raised its full-year adjusted operating income target range to between $8.5 million and $9.5 million -- up from its previous guidance for an operating profit between $5 million and $7 million.

With Similarweb's customer growth significantly outpacing its sales growth, some investors may be worried about pricing power. On the other hand, the company is still finding ways to increase operating margins -- and the passage of time may show that today's valuation pullback was an overreaction.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.