What happened

Shares of Tenable Holdings (NASDAQ:TENB) rose as much as 23.6% Wednesday morning as investors absorbed a fantastic third-quarter report. The online security specialist's stock settled down to a slightly milder 18% gain at 1:45 p.m. EDT.

So what

Tenable's revenues grew 32% year over year, landing at $91.9 million. Adjusted net losses of $0.07 per share were about half the size of the year-ago period's loss of $0.14 per share. Your average Wall Street analyst would have settled for a $0.11 loss per share on sales near $88.7 million, so Tenable exceeded analyst expectations across the board.

Looking ahead, Tenable's management expects fourth-quarter revenues in the neighborhood of $94 million and adjusted net losses of $0.12 per share. That's just ahead of Wall Street's current projections in both cases.

Two blue Ethernet cables bound together by a closed padlock.

Image source: Getty Images.

Now what

This sharp jump was less of a victory march and more of a rebound. Including today's 18% gain, Tenable's share prices have fallen 20% over the last 52 weeks. This ultra-volatile stock now sits in limbo, 33% above its yearly lows and 27% below the 52-week highs.

Throwing more fuel on the fast-moving fire, analyst firm JPMorgan upgraded Tenable to a "buy" with a price target 50% above current share prices. Analyst Sterling Auty cites an attractive risk/reward balance at a price far below those lofty 52-week highs.

I expect the volatility to continue for years to come, given Tenable's lumpy and unpredictable results. That's just the nature of investing in small-cap stocks with petite revenue streams.