Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of NetSuite Inc. Are Up Big Today

By Brian Feroldi - Jul 12, 2016 at 4:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares popped in response to rumors that the company might receive a takeover offer.

Image source: Getty Images.

What: Shares of NetSuite (N), a provider of cloud-based enterprise resource planning and e-commerce software, are on the move today. The company's stock is up more than 11% as of 3:55 p.m. EDT, due to rumors that are swirling about the company potentially catching a takeover bid.

So what: The rumor mill is buzzing that NetSuite could be an acquisition target, with the most likely suitor being the tech giant Oracle (ORCL 2.37%)As of this writing this appears to be just a rumor, as neither company has released any statement on the matter.

It's not hard to see why some believe Oracle would be interested in making a bid. NetSuite's revenue has grown by at least 30% for the last 15 quarters in a row, and the company continues to sign up new customers at a rapid pace. NetSuite has stated that it is stealing a significant amount of market share from SAP, a longtime rival of Oracle.

In addition, Oracle has been pushing hard over the last few years to become a leading provider of cloud services. Adding NetSuite to its empire would likely help it achieve its goal of becoming the first to reach $10 billion in cloud revenue. 

What's adding fuel to this rumor is the fact that Oracle just sold $14 billion worth of bonds at the end of June, a peculiar move for a company that already held more than $55 billion in cash on its balance sheet. In addition, Oracle's co-founder and chairman Larry Ellison currently owns about 43% of NetSuite, so the two companies are already closely linked. 

Now what: While it's always fun to see a stock jump substantially in a single day, investors in NetSuite should remember that this is still just a rumor. Until either company releases a statement that confirms or denies the claim, we don't have a lot of information to go on.

If you were either bullish or bearish on NetSuite's stock prior to today's pop, I see no reason to change your stance today.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NetSuite Inc. Stock Quote
NetSuite Inc.
Oracle Corporation Stock Quote
Oracle Corporation
$68.63 (2.37%) $1.59
SAP Stock Quote
$97.43 (2.18%) $2.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.