Why Freshworks shares fell today


What happened

Shares of freshworks (NASDAQ: FRSH) was crushed on Friday. The software-as-a-service title ended the daily trading session down 18% due to turmoil in the broader market and weaker-than-expected guidance that arrived with the company’s fourth-quarter results.

Freshworks reported fourth-quarter results after the market closed Thursday, reporting a non-GAAP (adjusted) loss per share of $0.06 on revenue of $105.5 million. The loss for the quarter was in line with market expectations, but sales for the period actually exceeded analysts’ average estimate of $5.16 million.

Even so, the company reported mounting losses in the current financial year, and the news came in conjunction with reports of Russia’s likely invasion of Ukraine.

Image source: Getty Images.

So what

Reports suggesting that Russia has decided to go ahead with an incursion into Ukrainian territory shook the market today, and the unfolding situation played a significant role in the sale of Freshworks shares. the S&P500 and Nasdaq Compound the indices ended the day down 1.9% and 2.8%, respectively.

Freshworks managed to grow revenue 44% year-over-year in the fourth quarter, but the company’s adjusted operating loss rose to $10.7 million from $2.3 million l ‘last year. It also looks like the losses will increase significantly this year.

Management’s median forecast calls for an adjusted operating loss of $11.5 million on revenue of $108 million in the first quarter. For the full year, the company expects a median adjusted operating loss of $52.5 million on revenue of $490.75 million.

Now what

The stock has fallen about 61% since the market closed on the day of its IPO in September.

FRSH Chart

FRSH data by YCharts.

The company now has a market capitalization of around $5.1 billion and is valued at around 10.6 times expected sales for this year. Freshworks continues to grow its sales at an impressive rate, and it may have a long streak of expansion in the enterprise software space, but the current market aversion to growth-dependent software stocks suggests that its shares could see more chaotic trading in the short term.

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Keith Noonan has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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