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Why AvePoint Is Down More Than 12% Today

By James Brumley – Nov 15, 2021 at 1:41PM

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Investors are responding to the release of Q3 numbers, though they're making a judgment without a great deal of fiscal context.

What happened

Shares of software company AvePoint (AVPT -0.60%) are down 12.7% as of midsession Monday in response to the release of third-quarter numbers and fourth-quarter guidance that aren't quite good enough.

So what

For the three-month stretch ending in September, AvePoint lost $28.7 million -- or $0.05 per share -- on sales of $53.9 million. Analysts were modeling revenue of $52.6 million. Non-GAAP (adjusted) operating profits came in at $4 million, or roughly $0.02 per share, versus analyst estimates of $0.01 per share. That still wasn't enough excite the market despite the 36% year-over-year improvement in sales.

Person looking at a falling chart on a computer screen.

Image source: Getty Images.

Guidance for the quarter now underway didn't stoke buying, either. AvePoint says it's going to generate between $56.4 million and $58.4 million worth of revenue, which should translate into an operating bottom line of somewhere between a breakeven and a non-GAAP profit of $1.5 million. That's again in line with analyst estimates for sales of $57.2 million and per-share earnings of $0.01. But investors clearly need more.

Now what

AvePoint is not only a young company but also a newly minted stock. It became the publicly traded entity we know today only late last year via its merger with a special purpose acquisition company, or SPAC. It's tough to determine a fair, sustainable price for a stock against such a backdrop. That's why today's sharp drop can't come as a complete surprise; investors continue to grapple with assigning it a value.

In light of the stock's 49% sell-off from January's high, though, today's brush with record lows is arguably a buying opportunity regardless of this difficulty. Granted, it's far from an ideal pick for everyone. Retirees in need of reliable dividend income, for instance, may want to steer clear. Given the months of selling leading up to today, it's arguable enough that Monday's steep setback is also a capitulation.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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