What happened

The stock of Nutanix (NASDAQ:NTNX) trailed a booming market last year, shedding 25% compared with a 29% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

Shares got off to a strong start but slumped in late February and continued trending lower since then.

A room full of computer servers.

Image source: Getty Images.

So what

February's decline was driven by a tough quarter highlighted by ballooning losses. The cloud infrastructure software company then said the same range of missteps and execution issues contributed to falling sales and profits in the fiscal third quarter, which resulted in lower contract conversion rates and shorter license lengths.

Now what

Investors got a bit more confident about management's turnaround plan after fiscal first-quarter sales beat expectations. The 2019 underperformance also lays the groundwork for a spiking share price if sales trends recover more quickly than expected.

Yet the software-as-a-service specialist may still underperform in 2020, at least until management can show that it has put its operating struggles behind it and is headed back toward consistent profit growth.

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.