What Happened?
Shares of digital storytelling platform WEBTOON (NASDAQ: WBTN) fell 24.4% in the morning session after the company reported third-quarter results that missed revenue expectations and provided a weak forecast for the upcoming quarter.
The company's revenue grew 8.7% year-over-year to $378 million, but this fell short of Wall Street's estimate of $382.2 million. While its GAAP loss of $0.09 per share was narrower than the anticipated $0.12 loss, other key metrics were weak. Adjusted EBITDA of $5.12 million missed expectations, and Monthly Active Users fell by 13.41 million from the previous year to 155 million. However, the outlook was the primary concern for investors. WEBTOON's fourth-quarter revenue guidance of $335 million at the midpoint was substantially below the consensus estimate of $397.8 million. The company also guided for an adjusted EBITDA loss of $4 million, adding to the negative sentiment.
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What Is The Market Telling Us
WEBTOON’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. But moves this big are rare even for WEBTOON and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 22 days ago when the stock dropped 6.2% on the news that new trade tensions and disappointing earnings from major tech companies weighed heavily on investor sentiment.
A key driver was the news that the White House is considering new restrictions on Chinese exports that use U.S. software, a move that could significantly impact technology companies. This uncertainty over escalating trade tensions created a broad sense of worry in the market. Simultaneously, shares of the semiconductor giant Texas Instruments dropped 6% after its latest earnings and future revenue forecast both came in weaker than expected, which is a big concern for the health of the tech industry. This poor performance from Texas Instruments immediately dragged down the entire semiconductor sector, causing other major chipmakers like Advanced Micro Devices and Micron Technology to also see significant declines. Compounding the bad news, streaming service Netflix saw its stock slump 9% after it missed its earnings targets, partly blaming a tax dispute in Brazil. The combined effect of renewed trade war fears and the direct evidence of underperformance from influential companies in the technology sector was enough to push the major market indexes lower.
WEBTOON is down 7.4% since the beginning of the year, and at $12.58 per share, it is trading 41% below its 52-week high of $21.31 from September 2025. Investors who bought $1,000 worth of WEBTOON’s shares at the IPO in June 2024 would now be looking at an investment worth $546.96.
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