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You Can't Afford to Ignore Tuesday's 2 Big Nasdaq Movers

By Dan Caplinger - Jun 22, 2021 at 1:59PM

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Find out what helped send the Nasdaq Composite toward record levels.

The Nasdaq Composite (^IXIC 0.00%) has lagged behind its fellow stock benchmarks lately, with other indexes hitting new highs even as the Nasdaq struggles to regain lost ground. Yet on Tuesday, the Nasdaq found its way back toward record territory, with gains of half a percent that would be sufficient to set a closing high if the market sustains its gains.

A couple of big movers helped set the Nasdaq up for success on Tuesday. Plug Power (PLUG 1.42%) has been a hit among hydrogen fuel cell fans, and the company's earnings report gave investors a lot of what they wanted to see. Meanwhile, Splunk (SPLK 0.03%) saw big gains after getting support from a key private investor. Below, we'll look more into these two stories and what they mean for the markets.

Plugging in

Shares of Plug Power jumped 11% on Tuesday afternoon. The hydrogen economy play had good things to say about its recent business performance.

A lot of Plug's numbers were encouraging. The company reported revenue of $72 million, up 76% compared to the year-ago quarter. Gross billings grew at a similarly impressive 71% pace year over year. The company said it shipped more than 1,300 of its GenDrive units, up from just 825 a year ago.

Indeed, Plug's performance would've been even better had it not been for some one-time challenges. Unprecedented cold weather in Texas caused force-majeure events in supplying hydrogen, which saw massive price increases in line with surging costs of natural gas during the weather event. The price spikes caused Plug's operating losses to nearly double from the same period a year ago.

Plug still has a long way to go to realize its full strategic vision. However, with progress on signing on partners and making good on key planks of its long-term growth strategy, Plug has a lot of shareholders excited about its potential.

Programmer working on a data server.

Image source: Getty Images.

A vote of confidence for Splunk

Shares of Splunk were up almost 10% on Tuesday afternoon. The data analytics specialist got a massive investment from a private equity investor that gave existing shareholders greater confidence in the company's future.

Splunk came to an agreement to sell convertible senior notes worth $1 billion to Silver Lake, a technology-focused institutional investor. The five-year notes will carry an interest rate of 0.75% per year and give Silver Lake the right to convert the debt into shares of stock at a price of $160 per share. That's around 30% higher than where the stock has traded over the past couple of weeks, and even after today's gains, it represents roughly 16% upside before conversion would become an issue.

Splunk expects that it will use the proceeds to buy back its stock on the open market, by initiating a share repurchase program. The intent of the repurchase is to offset any dilution that would result from the convertible notes.

Splunk took the opportunity to remind investors that its growth has been impressive lately, including an 83% rise in annual recurring revenue from its cloud operations in its most recent quarter compared to where it had been the previous year. With more than 200 customers spending $1 million or more annually on its platform, Splunk has made a lot of progress with its cloud transformation. With Silver Lake helping to advise the company, Splunk has even higher hopes of reaching its full potential in time.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Splunk. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Plug Power Inc. Stock Quote
Plug Power Inc.
$29.96 (1.42%) $0.42
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$13,047.19 (0.00%) $0.00
Splunk Inc. Stock Quote
Splunk Inc.
$114.84 (0.03%) $0.03

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

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