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Why Cognizant Technology Stock Fell Today

By Chris Neiger - May 6, 2021 at 1:29PM

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Investors appeared disappointed with the company's first-quarter results.

What happened

Shares of Cognizant Technology (CTSH 1.54%) fell today after the company reported its first-quarter results late yesterday. 

The tech stock had tumbled by 7.9% as of 2:09 p.m. EDT.

So what

Cognizant Technology's first-quarter revenue increased 4.2% year over year, to $4.4 billion, and adjusted earnings were $0.97 per share, ahead of Wall Street's consensus estimate of $0.94 per share.  

A red and green line graph on a black background.

Image source: Getty Images.

"In the first quarter, we successfully executed our strategy of embracing digital, investing in international expansion, and repositioning the Cognizant brand," CEO Brian Humphries said in a press release.

But despite the earnings beat, investors pushed Cognizant's stock down today. Investors may be selling some of their shares as part of a larger sell-off of other tech stocks today. 

Tech stocks have taken a hit since the beginning of this year as investors have looked to other sectors for more growth. The general thinking behind the shift is that other areas of the U.S. economy will now grow faster than the tech sector as the U.S. emerges from the pandemic.

This could be part of the reason why Cognizant investors were selling off some of their shares today. 

Now what

Cognizant's management issued guidance for the second quarter, with revenue expected to be $4.4 billion at the midpoint of guidance, up about 11% from the year-ago quarter. Additionally, the company's full-year revenue will be about $18 billion at the midpoint, representing an 8% year-over-year increase. 

With investors still trying to gauge how fast the U.S. economy will open back up and how it will affect tech companies, it's possible that Cognizant's shares could experience some more share price swings in the coming weeks. 

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Cognizant Technology Solutions. The Motley Fool has a disclosure policy.

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