What happened

Shares of Nutanix (NASDAQ:NTNX) plunged 35% in May, according to data from S&P Global Market Intelligence, after the cloud-computing software company delivered mixed fiscal third-quarter results and disappointing forward guidance.

Shares plunged as much as 16% on May 31, 2019 alone after Nutanix's quarterly update hit the wires. Revenue fell a modest 0.6% year over year, to $287.6 million, translating to an adjusted net loss of $103 million, or $0.56 per share. Most analysts were looking for a slightly wider adjusted net loss of $0.58 per share on revenue of $297 million.

Stock market data chart with a white arrow pointing downward.

IMAGE SOURCE: GETTY IMAGES.

So what

Nutanix's top-line shortfall wasn't a complete surprise. It also plunged only a few days earlier after Morgan Stanley analyst Katy Huberty downgraded the stock on concerns over rising competition and weak results from Nutanix's peers in the storage space. Huberty added that, while she likes Nutanix's technology portfolio, she believed "a turnaround will take longer than the two to three quarters assumed by investors."

To that end, in the company's quarterly earnings press release, Nutanix founding chairman and CEO Dheeraj Pandey elaborated: "While we faced a top-line impact in our third quarter as we continue to execute our strategic shift toward a recurring revenue business model, our strong foundation and commitment to our customers position us well for the long term."

Now what

In the meantime, Nutanix told investors to expect fiscal fourth-quarter revenue of between $280 million and $310 million, with an adjusted net loss per share of roughly $0.65. Here again, both ranges were below Wall Street's consensus estimates for an adjusted net loss of $0.49 per share on revenue closer to $333 million. When this was coupled with Nutanix's revenue miss in fiscal Q3, traders found more than enough reason to bid down the company's stock in response.