Here's Why Latch Stock Was Down 33% in May
Shares of property-technology company Latch (NASDAQ: LTCH) were down 33.1% in May, according to data provided by S&P Global Market Intelligence. The company reported financial results for the first quarter of 2022 on May 5, highlighting ongoing concerns. Then on May 20, Latch's management made a drastic move to preserve cash, further underscoring the bear case with the stock right now and leading to its underperformance for the month.
Latch is a small property-technology company. The business consists of a smart-lock hardware device (with a low profit margin) and its operating-system software (with high margins). The company had guided for first-quarter revenue of $12.7 million to $14.8 million, and it made good on this guidance by reporting quarterly revenue of $13.7 million. Moreover, software revenue of $3 million exceeded guidance and motivated management to raise full-year software revenue guidance.
Because its software revenue will be the driver of its future free cash flow, you might have expected the market to celebrate this development from Latch. But its business is simply behind schedule and has a deteriorating financial situation as a result.
Source Fool.com
