What: Shares of Ellie Mae (ELLI) dropped 11% by 3 p.m. ET today in what appears to be sympathy selling with many of the largest software stocks.
So what: Tableau Software (DATA) shocked the market by cutting guidance for the current quarter and full year when it reported earnings last night. CFO Tom Walker pointed to "softness" in enterprise software, particularly in North America. The market cut its share price in half in high-volume trading today.
Tableau and Ellie Mae don't really serve the same customers or the same needs. Ellie Mae's core business is in licensing software to help underwrite and manage mortgages, which has little to do with Tableau's business intelligence software. But when the market halves the valuation of one company in a sector, it isn't unusual for similar but mostly unrelated companies to ride a sympathy sell-off.
Now what: Barring any company-specific news, chalk this one up as just another weird day in a volatile market. While there may be some softening in enterprise software sales, it's unlikely to show up at banks and credit unions (Ellie Mae's core customers), which are almost universally spending more on compliance products and services like those Ellie Mae provides.
