Shares of Japan's Line Corp (LN) fell Wednesday after the recent social media IPO reported lower than expected fourth quarter results, leading Morgan Stanley to lower its recommendation on the stock.

LINE QUARTERLY NUMBERS: Earlier Wednesday, Line reported that Q4 net income fell 21% sequentially to 2.2B yen and operating income slumped 68% to 1.6B yen, while revenue grew 4% to 37.5B yen. According to Bloomberg, analysts had forecast net income of 3.1B yen, operating income of 5.3B yen, and revenue of 38.7B yen. Monthly active users in the company's key Asian regions rose to 167M from last quarter's 162M, and global MAUs came in at 217M, a 1% increase versus last year. Looking ahead to Q1, Line commented that revenues for the quarter "are expected to be higher compared to the corresponding period of 2016 driven by the steady growth of advertising," adding that "although increased operating expenses are expected following the expansion of services and recruitment activities, the group expects to continue the positive operating income trend."

MORGAN STANLEY CUTS RATING: Following this morning's report, Morgan Stanley analyst Masaharu Miyachi cut Line to Equal Weight from Overweight. Noting that the quarter's 1.6B yen operating profit landed "far below" its 6.2B yen forecast, the research firm said it still expects meaningful earnings growth over the long term, but lowered its immediate outlook given that Line's capital outlays will likely curb bottom line expansion for the next year or so.

PRICE ACTION: Shares of Line trading in New York are down 10.5% to $32.40 in afternoon trading. Since its NYSE debut in July of last year, the stock is down about 22%.