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Why Tenable Holdings Shares Jumped 24% on Thursday Morning

By Anders Bylund - Updated Oct 30, 2019 at 1:55PM

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The cybersecurity specialist posted solid third-quarter results, but the stock still has a long way to go before reaching all-time or annual record prices.

What happened

Shares of Tenable Holdings (TENB -1.82%) 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.

Anders Bylund 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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