Insights

Why UiPath Stock Fell 17% Last Month

What happened 
Shares of UiPath (NYSE: PATH), an enterprise automation software company, plunged by 17.4% in April, according to data provided by S&P Global Market Intelligence.
In part, that slump may have been driven by broader market trends. The S&P 500 fell 9% last month. Some UiPath investors may have also been slowly digesting the revenue guidance that the company delivered at the end of March.
So what 
April was a particularly bad month for most stocks — and UiPath was no exception. The S&P 500’s sharp drop was surpassed by the tech-heavy Nasdaq Composite’s nearly 12% plummet.
Image source: Getty Images.

The sell-off was fueled by investors growing increasingly concerned about the effects of high inflation on the U.S. economy, as well as risks inherent in the Federal Reserve’s strategy for getting inflation back in check.
In April, investors were attempting to anticipate how big the Federal Reserve’s next interest rate hike would be. Rising rates do act to tamp down inflation, but they also slow down economic growth. Technology stocks, including UiPath, have been bid down as investors worry that a potentially slower economy will mean lower sales and earnings for those companies.
The Federal Reserve did boost rates by 50 basis points at the beginning of May, and the central bank is planning an extended pattern of rate hikes from here.
Now what 
In addition to their concerns about the broader economy, I think UiPath investors become exceptionally pessimistic last month because of the company’s fiscal fourth-quarter report, which it released on March 30. 
For the period, which ended Jan. 31, UiPath’s earnings of $0.05 per share and sales of $289.7 million were both ahead of analysts’ consensus estimates. But the company’s revenue guidance range of $223 million to $225 million for its fiscal first quarter was far below Wall Street’s average estimate of $243 million.  
UiPath reiterated that guidance at the end of April when it announced that it was hiring Robert Enslin, formerly at Google Cloud, to be its co-CEO. Enslin will officially join the company later this month, so the jury is still out on what impact he might have. But the decision to bring in a new co-CEO may have caused some investors to feel concerned about how the management team was doing previously. 
Between the broader market sell-off, the weaker-than-expected guidance, and the decision to bring in some fresh leadership, it’s not all that surprising that investors grew less enthusiastic about UiPath stock in April. 
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends UiPath Inc. The Motley Fool has a disclosure policy. –

What happened 

Shares of UiPath (NYSE: PATH), an enterprise automation software company, plunged by 17.4% in April, according to data provided by S&P Global Market Intelligence.

In part, that slump may have been driven by broader market trends. The S&P 500 fell 9% last month. Some UiPath investors may have also been slowly digesting the revenue guidance that the company delivered at the end of March.

So what 

April was a particularly bad month for most stocks — and UiPath was no exception. The S&P 500’s sharp drop was surpassed by the tech-heavy Nasdaq Composite‘s nearly 12% plummet.

Image source: Getty Images.

The sell-off was fueled by investors growing increasingly concerned about the effects of high inflation on the U.S. economy, as well as risks inherent in the Federal Reserve’s strategy for getting inflation back in check.

In April, investors were attempting to anticipate how big the Federal Reserve’s next interest rate hike would be. Rising rates do act to tamp down inflation, but they also slow down economic growth. Technology stocks, including UiPath, have been bid down as investors worry that a potentially slower economy will mean lower sales and earnings for those companies.

The Federal Reserve did boost rates by 50 basis points at the beginning of May, and the central bank is planning an extended pattern of rate hikes from here.

Now what 

In addition to their concerns about the broader economy, I think UiPath investors become exceptionally pessimistic last month because of the company’s fiscal fourth-quarter report, which it released on March 30. 

For the period, which ended Jan. 31, UiPath’s earnings of $0.05 per share and sales of $289.7 million were both ahead of analysts’ consensus estimates. But the company’s revenue guidance range of $223 million to $225 million for its fiscal first quarter was far below Wall Street’s average estimate of $243 million.  

UiPath reiterated that guidance at the end of April when it announced that it was hiring Robert Enslin, formerly at Google Cloud, to be its co-CEO. Enslin will officially join the company later this month, so the jury is still out on what impact he might have. But the decision to bring in a new co-CEO may have caused some investors to feel concerned about how the management team was doing previously. 

Between the broader market sell-off, the weaker-than-expected guidance, and the decision to bring in some fresh leadership, it’s not all that surprising that investors grew less enthusiastic about UiPath stock in April. 

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends UiPath Inc. The Motley Fool has a disclosure policy.

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