NEW YORK (TheStreet) -- ZipRealty (ZIPR) is plummeting on Tuesday after issuing a fourth-quarter warning in its preliminary report for fiscal 2013 and filing a shelf registration with the Securities and Exchange Commission (SEC). By mid-afternoon, the micro-cap had taken off 25.2% to $4.91.
The real estate brokerage said it expects fourth-quarter revenue of $17 million, below the company's prior business outlook and 4.4% lower than a year earlier.
"Real estate sales in our markets slowed more sharply than expected during the fourth quarter, and our relative momentum was not strong enough to completely offset that change. As a result, our fourth quarter revenue was below the outlook we provided previously," said CEO Lanny Baker in a statement.
The company also warned net income would take a $1.7 million hit after settling an outstanding legal claim over the quarter relating to former compensation practices of employee real estate agents.For full-year 2013, the Emeryville, Calif.-based business anticipates $75.9 million in revenue, 3% higher than a year earlier. Over 2014, the company expects revenue growth in the mid-single-digit range. Also on Tuesday, ZipRealty announced it had filed a shelf registration with the SEC to sell $50 million in common stock, preferred stock and warrants. "Filing a shelf registration is a prudent step to provide additional financial flexibility for the company. Although we do not have immediate plans for raising and using this additional capital, we anticipate that a shelf registration will provide more efficient access to the capital markets and allow the company to act opportunistically in support of our growth objectives," said Baker. TheStreet Ratings team rates ZipRealty INC as a Sell with a ratings score of D. The team has this to say about their recommendation: "We rate ZipRealty INC (ZIPR) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been weak operating cash flow."
- You can view the full analysis from the report here: ZIPR Ratings Report