GDS (GDS -3.39%) stock got hit with sell-offs following the company’s fourth-quarter report this week. The China-based data center company’s share price ended this week’s trading down 21.5% from the previous week’s close, according to data from S&P Global Market Intelligence.
GDS published its fourth-quarter results before the market opened on Wednesday, and investors weren’t happy with the business’ performance in the period. But despite the big sell-off, the stock is still up roughly 231% over the last year.
GDS’s Q4 release spurred a big sell-off for the stock
GDS posted earnings $3.08 per American depositary share on sales of $368.6 million in the fourth quarter, but the profit stemmed from one-time accounting events. Meanwhile, the company posted a loss from continuing operations of $23.8 million in the period. Revenue was up 9.1% year over year, with growth mostly driven by the continued expansion of the company’s data center operations.
What’s next for GDS?
For the full-year period, GDS is guiding for sales to come in between 11.29 billion Chinese yuan ($1.56 billion) and 11.59 billion Chinese yuan ($1.6 billion). At the midpoint of the guidance range, that would mean annual sales growth of roughly 11%. While the company’s sales growth looks poised to accelerate this year, investors were hoping for a stronger rate of expansion.
With artificial intelligence (AI) and other technologies driving up demand for data center services and GDS expanding its operating footprint, the business has some big sales expansion opportunities ahead of it. But relatively conservative guidance for sales growth this year suggests that revenue growth could wind up being slower than investors previously anticipated.
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.
