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Why Pure Storage Stock Took a Hit Friday

By Daniel Sparks - Nov 22, 2019 at 4:15PM

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Revenue was within management's guidance range -- but it wasn't good enough for the Street.

What happened

Shares of Pure Storage ( PSTG 5.61% ), which provides an enterprise data storage platform, fell sharply on Friday. By the time the market closed, shares were down 15.1%.

The growth stock's pullback followed the company's third-quarter earnings report, which included revenue and non-GAAP (adjusted) earnings per share that missed analysts' average forecasts. And the company's fourth-quarter outlook was below expectations.

A chalkboard sketch of a chart showing a stock price declining

Image source: Getty Images.

So what

Pure Storage's third-quarter revenue increased 15% year over year to $428.4 million, management announced after market close on Thursday. Non-GAAP earnings per share were $0.13. Analysts on average were expecting revenue of $440 million and adjusted EPS of $0.09. 

But it's notable that Pure Storage's revenue was within management's guidance range for the period -- and management seemed pleased with the results. "Our continued market-beating growth is a result of ever more customers realizing the superior value that our solutions offer," said CEO Charles Giancarlo.

Now what

Also serving as a reason for the Street's bearish response to the report, Pure Storage's fourth-quarter revenue outlook missed expectations.

Management said it expects revenue in the quarter to be between $484 million and $496 million. Analysts on average were expecting revenue of $512 million during the period.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Pure Storage Stock Quote
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PSTG
$33.32 (5.61%) $1.77

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