Why Vimeo Stock Is Plummeting Today

Vimeo (NASDAQ: VMEO) stock is getting hit with huge sell-offs in Thursday's trading. The video streaming company's share price was down 20.9% as of 1:25 p.m. ET today. At the same point in time, the S&P 500 index and the Nasdaq Composite index were both down 0.8%%.

Vimeo posted its fourth-quarter results after the market closed yesterday, delivering mixed results. Revenue for the period beat Wall Street's target, but it posted a smaller-than-expected profit. Investors are also underwhelmed by the company's guidance.

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Vimeo stock crashes on big earnings miss

Vimeo reported earnings of $0.01 per share on revenue of $103.16 million in the fourth quarter. The average Wall Street analyst estimate had called for a per-share profit of $0.03 on revenue of $100.59 million.

Revenue was down roughly 2% year over year, and earnings per share slumped 80% compared to the per-share profit of $0.05 in the previous year's quarter.

What's next for Vimeo?

Management says that it will be ramping up its investments to drive innovation this year in hopes of increasing sales and bookings. The streaming company said that its Vimeo Enterprise and over-the-top-and-streaming categories saw growth in the fourth quarter and accounted for 34% of overall sales in the period. It also indicated that it was seeing some encouraging results from price increases.

Vimeo expects low-single-digit sales growth early in 2025, with sales picking up later in the year. Management's commentary suggests that the business could return to double-digit revenue growth next year.

While the company indicated that some of its core offerings are seeing solid growth momentum, it's not surprising that investors are reacting negatively to the fourth-quarter numbers and guidance. Earnings saw a big drop-off last quarter, and guidance for increased investment to drive growth this year suggests that previous initiatives haven't been panning out. It also signals that profitability could face added pressures this year as Vimeo moves to reenergize its sales performance.

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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.