What Happened:
Shares of project management software maker Smartsheet (NYSE:SMAR) jumped 6.6% in the morning session after the company agreed to be acquired by funds managed by Blackstone and Vista Equity Partners in an all-cash transaction valued at approximately $8.4 billion, translating to an offer of $56.50 per share. This price represents a premium of roughly 41% to the volume-weighted average closing price of Smartsheet stock for the 90 trading days ending July 17, 2024 (the day before media reports surfaced of a potential deal).
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What is the market telling us:
Smartsheet’s shares are very volatile and over the last year have had 9 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 previous big move we wrote about was 18 days ago, when the stock gained 10.1% on the news that the company reported second-quarter earnings results, with revenue, billings, adjusted operating income, and EPS outperforming Wall Street's estimates.
On the other hand, full-year revenue guidance slightly missed Wall Street's estimates. The company is likely experiencing challenges with smaller customer cohorts amid the challenging demand environment, with churn rate in the segment up slightly to 4.5%. Otherwise, we think this was a decent quarter featuring some areas of strength but also some blemishes, especially in the outlook.
Smartsheet is up 19.1% since the beginning of the year, and at $55.52 per share, has set a new 52-week high. Investors who bought $1,000 worth of Smartsheet’s shares 5 years ago would now be looking at an investment worth $1,461.
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