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Why Cloudera Stock Tumbled Today

By Timothy Green – Apr 4, 2018 at 12:09PM

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The cloud company sees growth slowing way down this year.

What happened

Shares of Cloudera (CLDR) crashed on Wednesday following the cloud software company's fourth-quarter report. While Cloudera beat analyst estimates for both revenue and earnings, subpar guidance sent the stock down 39% by 12:30 p.m. EDT.

So what

Cloudera posted fourth-quarter revenue of $103.5 million, up 42% year over year and about $4.9 million higher than the average analyst estimate. Subscription revenue soared 50% to $84.3 million. "In our first few quarters as a public company, we introduced six major product offerings, completed a strategic acquisition, and delivered significant technological innovations," said CEO Tom Reilly.

A drawing of a cloud.

Image source: Getty Images.

Non-GAAP earnings per share came in at a loss of $0.10, up from a loss of $0.30 in the prior-year period and $0.13 higher than analysts were expecting. The company lost $0.31 per share on a GAAP basis.

Cloudera's guidance for the first quarter of fiscal 2019 was in line with analyst estimates, calling for revenue between $101 million and $102 million and a non-GAAP loss per share between $0.17 and $0.19. But guidance for the full year was a different story. The company sees fiscal 2019 revenue between $435 million and $445 million, well below analyst expectations of $460.2 million.

Now what

Two analyst downgrades triggered by Cloudera's guidance likely played a role in driving down the stock. JPMorgan dropped its rating to neutral, while Deutsche Bank lowered its rating to hold.

A lofty valuation may have also been a factor. Cloudera's market capitalization prior to Wednesday's plunge sat at roughly $3.2 billion. That's more than 8.5 times fiscal 2018 sales, a multiple that bakes in some pretty lofty growth expectations. With Cloudera now expecting revenue to grow by just 20% this year, the stock is facing a brutal reckoning about a year after its IPO.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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