What Happened?
Shares of internet service provider Cogent Communications (NASDAQ: CCOI) fell 29.1% in the morning session after the company reported disappointing fourth-quarter 2025 financial results that showed declining revenue and significant cash burn.
Service revenue for the quarter was $240.5 million, a 4.7% decrease from the same period in the previous year and below analyst forecasts. While the company's reported loss of $0.64 per share was narrower than Wall Street expected, this positive surprise was overshadowed by other negative signals. The company's free cash flow was negative, with a cash burn of $43 million during the quarter, worsening from the $31.6 million burned in the same period last year. The combination of missing revenue expectations and accelerating cash burn appeared to heavily concern investors, leading to the stock's sharp decline.
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What Is The Market Telling Us
Cogent’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. But moves this big are rare even for Cogent and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 6.8% on the news that the major indices rebounded from a week of heavy selling.
This rally was fueled by a recovery in technology stocks and a significant bounce in Bitcoin, which stabilized after losing over half its value from its October peak. Investor sentiment was also lifted by a surprising improvement in U.S. consumer sentiment and the realization that massive AI-related capital expenditure, such as Amazon's planned $200 billion, directly benefits chipmakers like Nvidia and Broadcom. These "pick-and-shovel" winners jumped as much as 7%, helping the S&P 500 edge back into positive territory for 2026. The highlight of the day was the Dow Jones Industrial Average, which surged and crossed the historic 50,000 threshold for the first time.
Cogent is down 11.5% since the beginning of the year, and at $18.26 per share, it is trading 77.6% below its 52-week high of $81.45 from February 2025. Investors who bought $1,000 worth of Cogent’s shares 5 years ago would now be looking at an investment worth $311.46.
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