What happened
Shares of Braze (BRZE 1.10%), a customer engagement platform company, fell sharply this week after the company reported fiscal results for the second quarter, which ended on July 31. While the company beat analysts' top- and bottom-line consensus estimates, investors appeared disappointed with the company's third-quarter guidance.
As a result, the tech stock plunged by 21.7% this week, according to data provided by S&P Global Market Intelligence.
So what
Braze reported revenue of $86.1 million for the quarter, which was up 55% from the year-ago quarter and beat Wall Street's average estimate of $81.1 million.
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The company's non-GAAP (adjusted) net loss for the quarter of $0.16 was an improvement from a loss of $0.32 in the year-ago quarter and also outpaced analysts' consensus estimate of a loss of $0.20 per share.
But investors mostly ignored those results and instead focused their attention on the company's third-quarter guidance. Braze's management said that the company's loss per share in the quarter will be in the range of $0.23 to $0.22, which was worse than analysts' average estimate of a loss of $0.20.
Technology investors are keeping a very close eye on company bottom lines right now, and Braze investors weren't happy that the third-quarter earnings guidance was below Wall Street's consensus estimate.
Now what
Making matters worse for Braze's stock this week, the latest inflation report showed that the consumer price index rose in August by 0.1%. The increase was unexpected, and it sent a shock wave through the stock market, sending the broader S&P 500 down 5% this week.
While Braze's recent quarterly results weren't bad, there could be more instability for the stock in the near term. The Federal Reserve is expected to hike the federal funds rate again next week, potentially with another 75-basis-point increase, to tamp down inflation.
Some investors are staying away from the tech sector right now -- including Braze's stock -- and are instead investing in seemingly less risky areas of the market, fearing that more rate hikes could hurt the economy.
