Technology stock

Why WM Tech Stock Crashed Today

What happened

Shares of WM technology (NASDAQ: MAPS) were down 20.6% as of 12:44 p.m. EST Friday after reporting third-quarter financial results.

So what

Revenue increased 9% year over year to $51 million. However, adjusted revenue increased by 46% in the United States, after excluding certain Canadian-based retailers who did not provide valid license information and were removed from the Weedmaps marketplace. Monthly active users grew 37% year over year to 13.9 million. “Our third quarter results reflect the momentum we are seeing as we focus on executing and investing in our growth opportunities,” CEO Chris Beals said.

Image source: Getty Images.

WM Technology is maneuvering to become the software solution of choice for companies operating in the cannabis industry. In September, it acquired Sprout, the leading cloud-based marketing platform that helps cannabis retailers target new customers via email and text and provides analytics and tools to retain existing customers.

However, investors could have looked for better performance in terms of profitability. Adjusted earnings before, interest, taxes, depreciation and amortization (EBITDA) were $10.4 million, compared to $16.5 million in the year-ago quarter.

Now what

Management continues to invest in the future. It continues to hire at a good time and roll out new features to its mobile app, including the recent introduction of the Advance Order feature in the iOS app. But the company’s guidance leaves a lot to be desired for this much-loved title.

For the fourth quarter, management calls for revenue to remain roughly at the same level as the third quarter, being in the range of $50 million to $52 million. Adjusted EBITDA is expected to decline sequentially between $3 million and $5 million, which could also contribute to the negative investor reaction.

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