Why Are JFrog (FROG) Shares Soaring Today

Anthony Lee /
2023/11/02 1:07 pm EDT

What Happened:

Shares of software development tools maker JFrog (NASDAQ:FROG) jumped 8.79% in the morning session after the company reported third quarter results that beat analysts' revenue, billings, adjusted EBITDA and EPS estimates. JFrog attributed this impressive performance to the sustained strength of its cloud business and the expansion of its customer base as the adoption of its supply chain platform accelerates. Notably, JFrog secured numerous new large contracts during the quarter, and free cash flow demonstrated significant improvement. Looking ahead, the revenue guidance for the next quarter and full year came in in-line with consensus expectations. Overall, we and the market agree that this was a great quarter, showing that the company is performing better than previously expected.

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What is the market telling us:

JFrog's shares are quite volatile and over the last year have had 15 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was six months ago, when the stock gained 7.53% on the news that the company reported first-quarter results that exceeded analysts' revenue, operating income, and earnings per share (EPS) expectations. Customer growth also accelerated, though net revenue retention rate declined. In addition, revenue guidance for the next quarter and full year were in line with Consensus estimates. Overall it was a strong quarter for the company.

JFrog is up 19.3% since the beginning of the year, but at $26.27 per share it is still trading 14.6% below its 52-week high of $30.77 from July 2023. Investors who bought $1,000 worth of JFrog's shares at the IPO in September 2020 would now be looking at an investment worth $405.16.

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