Why Digital Turbine Stock Plunged This Week
Mr. Market misjudges growth stories pretty often. Here's one more example.
This week, Digital Turbine's stock plummeted 29.7% as accounting revisions and shrinking gross margins took a toll. The company reported a fiscal second-quarter revenue of $178.7 million on Nov. 9, surpassing estimates, but disclosed an accounting error that understated revenue-share obligations by $3.5 million. Gross margins contracted by 400 basis points to 43%.
The sell-off erased $350 million in market cap, reducing Digital Turbine's value to $888.6 million. Despite revenue growth across segments, higher partner payout costs led to higher expenses. The stock, down 52.4% from its 52-week high, now trades at a 1.4 P/S ratio. Investors are watching for improved profit execution and margin stability under new CFO Daniel Lentz.
Digital Turbine remains a buy according to analysts despite ongoing volatility and accounting scrutiny.
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