What Happened:
Shares of cloud infrastructure automation platform HashiCorp jumped 12.7% in the pre-market session after reports that the company is exploring options, including a potential sale. Oppenheimer analyst Ittai Kidron weighed in on the development, adding, "Several parties could be interested in HashiCorp as it holds core in-need technologies enabling enterprises to scale in multi-cloud environments...Given the attractive near-term operating potential and multiples of recent takeouts, we believe the company can fetch a price of $32-$40/share, reflecting a ~8-10x FY26 EV/Sales multiple."
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What is the market telling us:
HashiCorp's shares are very volatile and over the last year have had 21 moves greater than 5%. But moves this big are very rare even for HashiCorp and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move we wrote about was 12 days ago, when the stock gained 12.8% on the news that the company reported fourth-quarter results, which beat Wall Street's revenue and EPS estimates, driven by an increase in its customer base.
On the other hand, its net revenue retention rate of 115% fell short of analysts' 119% forecast. Its full-year revenue guidance also came in slightly below expectations (missed by 1.6%), suggesting a slowdown in demand. However, profitability ratios were strong during the quarter as HashiCorp maintained its 80%+ gross margin while free cash flow stayed positive for the second consecutive quarter. With the results, HashiCorp announced a share repurchase program for up to $250 million of the company's common stock. Overall, this was a decent quarter for HashiCorp.
HashiCorp is up 24.3% since the beginning of the year, but at $28.41 per share it is still trading 19.9% below its 52-week high of $35.49 from June 2023. Investors who bought $1,000 worth of HashiCorp's shares at the IPO in December 2021 would now be looking at an investment worth $333.37.
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