What happened

A disappointing earnings report was the catalyst for Tuesday's sell-off of Tuya (TUYA -0.51%), a China-based company that operates an Internet of Things (IoT) cloud development platform. The company's American depositary shares (ADS) fell by as much as 20% during the session before recovering to end the trading day nearly 10% lower.

So what

In the earnings release published after market hours Monday, Tuya said that for the fourth quarter, it booked revenue of $75 million -- roughly 19% higher on a year-over-year basis. On the other hand, the company's non-GAAP (adjusted) net loss deepened to nearly $49 million ($0.09 per ADS), from the year-ago period's deficit of slightly more than $18 million.

Concerned person with head in hands gazing at a laptop screen.

Image source: Getty Images.

On average, analysts following the stock were modeling for almost $74.3 million on the top line, but they were expecting a narrower adjusted net loss of $0.06 per ADS.

Management said Tuya's top-line growth was due to several factors.

"During 2021, our core IoT [platform-as-a-service] business continued to expand in both geographic coverage and product categories," said CEO Jerry Wang. "Importantly, the increasing penetration of IoT worldwide has demonstrated the immense market opportunities globally."

NYSE: TUYA

Tuya
Today's Change
(-0.51%) -$0.01
Current Price
$1.94
Arrow-Thin-Down

Key Data Points

Market Cap
$1B
Day's Range
$1.94 - $2.00
52wk Range
$1.28 - $4.63
Volume
108
Avg Vol
4,485,777
Gross Margin
48.25%
Dividend Yield
N/A

Now what

Tuya also proffered limited guidance -- specifically, a revenue forecast for the first quarter of $50 million to $57 million. The top of that range would be only slightly higher than the $56.9 million it brought in during Q1 2021. It would also be far below analysts' average estimate for revenues of just under $95 million. It's understandable, then, why investors sold off the stock Tuesday.