Please ensure Javascript is enabled for purposes of website accessibility

Why HubSpot Crashed 13.9% Today

By Todd Campbell - Mar 9, 2020 at 8:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A global market selloff in stocks sent the marketing, sales, and service software company tumbling.

What happened

HubSpot (HUBS 5.17%) shares lost 13.9% of their value today, as a global stock market sell-off more than offset tailwinds associated with the company's solid financial performance in 2019.

So what

HubSpot is a software-as-a-service technology company that offers tools that small and midsize companies use to improve their marketing, sales, and customer service. Although the business is growing rapidly, a 6.95% sell-off in the Invesco NASDAQ 100 ETF (QQQ 3.26%) created a stiff headwind today that bullish investors couldn't overcome.

A man in a suit bites his finger nail.


On Feb. 12, management reported that fourth-quarter revenue improved 29% to $186.2 million, bringing full year sales to $674.9 million, up 32% compared with 2018. The revenue growth resulted in non-GAAP net income of $20.9 million in Q4, up from $15.8 million one year ago, and full year non-GAAP net income of $69.8 million, up from $36.9 million in 2018.

The company also issued guidance for total revenue in the range of $840.5 million to $844.5 million in 2020, and non-GAAP net income of $1.24 to $1.32. The earnings outlook was a bit light to expectations because of a ramp up in hiring that the company expects will reduce margin by about 3% year over year in the first half of 2020. 

Now what

Management continues to invest back into the company to drive market share and client retention. Investments like that could mean that the company's profit is hamstrung in the short term, but the move could pay off in the form of greater profitability over time. The company's client count increased 30% in the past year and average subscription revenue is holding steady. If the company can generate more revenue per customer by leveraging its higher retention rate via cross-selling, buying shares on sale could pay off.


Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

HubSpot Stock Quote
$352.44 (5.17%) $17.32
PowerShares QQQ Trust, Series 1 Stock Quote
PowerShares QQQ Trust, Series 1
$309.10 (3.26%) $9.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.