Why Servicesource International Inc Shares Plummeted Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Servicesource International Inc (NASDAQ: SREV  ) plunged nearly 33% Friday after the recurring-revenue-management company turned in disappointing first-quarter results.

So what: Quarterly adjusted revenue rose 10% year over year, to $67.3 million, which translated to an adjusted loss of $0.07 per diluted share. Analysts, on average, were expecting a loss of $0.05 per share on sales of $68.56 million. Meanwhile, adjusted EBITDA was a loss of $6.4 million, compared with a loss of $0.5 million in the same year-ago period.

Now what: Though CEO Mike Smerklo insisted Servicesource's "market opportunity and value proposition remain strong," he also admitted first quarter revenue "came in below our expectations and we are moving aggressively to implement operational changes that will better align us with our customers."

That such changes are even required in the first place is a huge concern for long-term investors, especially considering shares already trade around 70 times next year's estimated earnings, even after today's drop. Keeping in mind that those estimates are likely to come down after today's results, I'll be watching this one from the sidelines.

Six stock picks poised for incredible growth
In the meantime, there are plenty of other great stocks in which you can put your money to work. But how can you find them? Consider the expertise of Motley Fool co-founder David Gardner, who has proved skeptics wrong, time, and time, and time again, with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.