When the market opened today, AOL shares (NYSE:AOL) took an immediate nose dive, dropping over 10% on the initial launch of the trading day. As a result of the nose dive, the price for AOL shares dropped under $13 for the first time since the company spun off from Time Warner in December 2009.
What’s interesting is that AOL reported an actual gain in advertising revenue in Q2 2011, something that hasn’t happened for the media giant since since 2008.
However, underneath the glitter of the gain in ad revenue lurks something that has investors scared which is the fact that AOL’s overall traffic is dropping. In fact, according to Forbes today, there’s been an abrupt slowdown in June that persisted through July and has already forced the company to lower its earnings estimates for the second half.
And even though AOL’s CEO Tim Armstrong is excited about the fact that AOL posted an actual gain in ad revenue for Q2, investors are ejecting because the overall revenue is sinking, with virtually no end in sight.