Why Cloudera, Inc. Stock Fell 14.3% in September
What happened
Cloudera (NYSE: CLDR) dipped 14.3% in September, according to data from S&P Global Market Intelligence, following a post-earnings sell-off and the announcement of a secondary stock offering.
So what
Cloudera, which specializes in big data and Hadoop distribution, released its second-quarter earnings results on Sept. 7, delivering revenue and earnings that topped the average analyst estimates. Despite a strong performance that saw subscription revenues climb 46% year over year, overall sales climb 39%, and new guidance for a smaller loss on the fiscal year, the company's shares dipped following the earnings release.
Shares continued to fall after the company announced on Sept. 15 that it had filed for a new stock offering. Details on the follow-up offering are still somewhat scarce, but the company has confirmed that it will involve selling existing shares and issuing new stock. The company's post-IPO lockup period is set to expire on Oct. 25, and the potential for large insider sell-offs could be another source of anxiety for shareholders.
Now what
Along with chief competitor Hortonworks, Cloudera is a first mover in enterprise Hadoop platforms, and stands to benefit from rapidly expanding addressable markets for categories like data analytics and machine learning. As a young company operating in the fast-growing cloud-services space, Cloudera has a lot of room to run if its business manages to remain competitive. On the other hand, it will likely have to fend off resource-rich competitors like Oracle, SAP, and IBM, and come up with new ways to differentiate its product offerings.
With a roughly $2.2 billion market cap, there's lots of potential for volatility with Cloudera stock, and, as shown in September, even solid earnings performance might not be met with a favorable market reaction. Investors in the company should closely track the company's progress -- while not reading too much into big short-term swings in valuation.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.