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Why Splunk Inc. Stock Tumbled Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of operational intelligence software specialist Splunk Inc. (NASDAQ: SPLK  ) dropped more than 11% Tuesday amid a broader pullback in momentum stocks in the tech sector.

So what: For perspective, the tech-heavy NASDAQ Composite Index simultaneously dropped by nearly 1.8% during Tuesday's intraday trading. And going into yesterday's close, Splunk stock had already risen more than 30% since touching a new 52-week-low just over a month ago. With shares now valued at around 18.5 times trailing 12-month sales, and 436 times next year's estimated earnings, it's no surprise Splunk pulled back harder than many other tech stocks today.

Now what: Splunk's recent lows were set only a few days after the company announced better-than-expected first quarter results, but left the market wanting more with full-year results which "only" brought it in line with what analysts were already modeling. Today's pullback, then, effectively brings Splunk shares to just below where they stood before that quarterly report.

As it stands, and considering Splunk's still-lofty valuation, I'm personally content continuing to watch this one from the sidelines. For long-term investors who already own the stock, however, today's volatility should ultimately prove but a blip in the radar.

Leaked: Apple's next smart device (warning, it may shock you)
After all, Splunk isn't the only company growing quickly. In fact, Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But another small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

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Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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