Why Cloopen Stock Soared 19%, Then Gave Most of It Back

Shares of Cloopen Group Holding (NYSE: RAAS), a Beijing-based provider of cloud-based communications, soared by nearly 19% in early trading Thursday before executing a clean 180-degree turn and giving almost all of those gains back. By the close of trading, Cloopen stock was up by only 3.8%.

As you've probably guessed already -- this being earnings season after all -- this was third-quarter earnings day for Cloopen. The company reported its Q3 revenues grew more than 125% year over year to $42.9 million, and its gross margins rose by 540 basis points to 43.5% -- offering plenty of reasons for investors to get excited.

That was the good news. Now here's the bad: $42.9 million may be more than twice the revenue Cloopen collected a year ago, but it was still less than the $43.3 million that Wall Street analysts had predicted it would book. As a result, Cloopen actually missed on the top line. The company also failed to earn a profit on all of this new revenue, instead losing $0.05 per share for the quarter.

Source Fool.com