Please ensure Javascript is enabled for purposes of website accessibility

Here's Why HubSpot Stock Soared 38% Higher in February

By Jon Quast - Mar 3, 2021 at 10:45AM

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

The company is adding new customers hand over fist and is making moves to keep this going.

What happened

Shares of customer-relationship management software company HubSpot (HUBS -1.65%) soared 38.4% higher in February, according to data provided by S&P Global Market Intelligence. The company started the month by acquiring content company The Hustle. But the real news is its full-year 2020 financial results, which blew away Wall Street's expectations.

So what

News of HubSpot's acquisition of The Hustle first broke early in February, but wasn't officially confirmed until later in the month. HubSpot's management has observed that many of its customers find it through media like videos and podcasts. By acquiring The Hustle (reportedly for $27 million), it hopes to leverage its content to drive new customer acquisition.

Four business men are carried up into the sky by rising arrows.

Image source: Getty Images.

Acquiring new customers is something HubSpot did particularly well in 2020. Toward the end of the year, the company surpassed 100,000 customers, translating to 42% year-over-year growth. This strong growth helped HubSpot beat expectations when it reported full-year financial results on Feb. 11. Full-year revenue increased 31% from 2019 to $883 million and the company is now generating recurring revenue at a rate of over $1 billion annually. 

Now what

Unlike many companies, HubSpot management offered guidance for 2021. It expects full-year revenue of $1.16 billion to $1.17 billion, which would represent 31% to 32% year-over-year revenue growth -- a slight acceleration from 2020. Given how well it's executed so far and how strong guidance is, it's not surprising to see this growth stock deliver market-beating gains in February.

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
$333.54 (-1.65%) $-5.60

*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 05/20/2022.

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.