DOMO Stock Slumps 35% After Disappointing Earnings and Guidance

DOMO stock

Cloud computing may be the way to go, but not all businesses are doing as well as the others. One of the companies in this space is Domo Inc (NASDAQ:DOMO), and since the company went public in June 2018, DOMO stock has proven to be an extremely volatile one.

Back in March, DOMO stock had touched an all-time high of around $47, but since then, the stock has plunged by as much as 65%, and the Q2 2019 results did not bring much cheer either.

Disappointing Quarter

The company hit $41.7 million, which reflected a year-on-year rise of 22%. On the other hand, revenues from subscriptions contributed as much as 84% to the total revenues. However, it must have come as a disappointment for investors that the total billings grew by only 9% as opposed to the average growth of 25% over the past few quarters. The competition in the sector has also intensified over the past months, and the acquisition of some of its rivals by tech giants has also created a certain degree of uncertainty.

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The company projected that the full-year revenue is going to be in the $168 million to $169 million range. However, that has proven to be a dampener as analysts had estimated revenues of $173 million to $174 million.

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A disappointing show in the second quarter financial results from the company saw DOMO stock plunging again and has dropped by as much as 35% at $16.35.

Analysts Issue Bearish Report

After the publication of the results, JMP Securities termed the results and the projections as being “disappointing.” It cut its price target from $37 to $10. JMP Securities also stated that Domo has not been able to grow its international business as steadily and the drop in billing has also been cited as a factor behind the gloomy outlook. However, the firm added that it is still bullish on the stock and believe that Domo will keep cutting expenses.

On the other hand, Cowen classified DOMO stock as an ‘outperform’ and reduced the price to $28 from $52. It pointed out that the company is not being able to close deals quickly enough.

What do you think?

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Featured image: DepositPhotos © Jirsak