Insights

Why Confluent Stock Is Plummeting Today

What happened
Confluent (NASDAQ: CFLT) stock is seeing big sell-offs again this Friday. The data-streaming company’s share price was down roughly 15.6% in the daily trading session as of noon ET.
Confluent released first-quarter earnings results after the market closed yesterday, and shares are falling despite results for the period coming in better than the market had anticipated. The company reported a non-GAAP (adjusted) loss per share of $0.19 on sales of $126 million, while the average analyst estimate had guided for a loss of $0.21 per share on sales of $119.49 million.
Image source: Getty Images.

So what
Despite Q1 sales and earnings coming in ahead of the market’s targets, investors and analysts fixated on Confluent’s slowing sales growth. Revenue grew roughly 64% year over year in the quarter, which was in line with sales growth in the last fiscal year but below the 71% growth that the company posted in 2021’s fourth quarter. 
With the Federal Reserve recently announcing a 50-basis-point increase for interest rates and making comments broadly perceived to have bearish implications for the stock market, scrutiny of companies with growth-dependent valuations has intensified. Following the Q1 release, multiple analysts cut their one-year price targets on the stock, which likely added to selling momentum at a time when growth stocks are already under pressure.
Now what
Confluent expects second-quarter revenue to be between $130 million and $132 million, with the midpoint of that target range coming in a bit below the average analyst estimate’s pervious target for revenue of $131.79 million. Management expects an adjusted loss per share between $0.19 and $0.21, with the midpoint of that range being in line with the market’s target. 
For the full year, management is targeting sales between $554 million and $560 million, representing annual growth of 43.6% at the midpoint. Meanwhile,  the average analyst estimate had estimated revenue at $558.82 million. The company’s guidance for an adjusted loss between $0.73 and $0.79 per share was roughly in line with the average target for a per-share loss of $0.76.
Confluent now has a market capitalization of roughly $6.7 billion and is valued at approximately 12 times this year’s expected sales. 
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Confluent, Inc. The Motley Fool has a disclosure policy. –

What happened

Confluent (NASDAQ: CFLT) stock is seeing big sell-offs again this Friday. The data-streaming company’s share price was down roughly 15.6% in the daily trading session as of noon ET.

Confluent released first-quarter earnings results after the market closed yesterday, and shares are falling despite results for the period coming in better than the market had anticipated. The company reported a non-GAAP (adjusted) loss per share of $0.19 on sales of $126 million, while the average analyst estimate had guided for a loss of $0.21 per share on sales of $119.49 million.

Image source: Getty Images.

So what

Despite Q1 sales and earnings coming in ahead of the market’s targets, investors and analysts fixated on Confluent’s slowing sales growth. Revenue grew roughly 64% year over year in the quarter, which was in line with sales growth in the last fiscal year but below the 71% growth that the company posted in 2021’s fourth quarter. 

With the Federal Reserve recently announcing a 50-basis-point increase for interest rates and making comments broadly perceived to have bearish implications for the stock market, scrutiny of companies with growth-dependent valuations has intensified. Following the Q1 release, multiple analysts cut their one-year price targets on the stock, which likely added to selling momentum at a time when growth stocks are already under pressure.

Now what

Confluent expects second-quarter revenue to be between $130 million and $132 million, with the midpoint of that target range coming in a bit below the average analyst estimate’s pervious target for revenue of $131.79 million. Management expects an adjusted loss per share between $0.19 and $0.21, with the midpoint of that range being in line with the market’s target. 

For the full year, management is targeting sales between $554 million and $560 million, representing annual growth of 43.6% at the midpoint. Meanwhile,  the average analyst estimate had estimated revenue at $558.82 million. The company’s guidance for an adjusted loss between $0.73 and $0.79 per share was roughly in line with the average target for a per-share loss of $0.76.

Confluent now has a market capitalization of roughly $6.7 billion and is valued at approximately 12 times this year’s expected sales. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Confluent, Inc. The Motley Fool has a disclosure policy.

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