Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Anaplan Dropped 20% on Wednesday

By Brett Schafer - Nov 24, 2021 at 12:50PM

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

Investors were not satisfied with the company's latest earnings report.

What happened

Shares of Anaplan ( PLAN 4.79% ) dropped by 23% on Wednesday morning after the company reported its fiscal third-quarter results. The cloud platform for worker connectivity and performance was down around 17.5% as of 12:16 .m. ET. 

So what

After the bell Tuesday, Anaplan released its earnings results for the period ending Oct. 31. Revenue grew 35.2% year over year to $155.3 million, but its GAAP operating loss was $48.2 million, widening from its $35.9 million loss in the prior-year period. The company had a dollar-based net expansion rate of 119% in fiscal Q3, which means that from its existing customers, Anaplan had approximately 19% year-over-year revenue growth.

A man leaning against a window dissapointed.

Image source: Getty Images.

It is tough to pin down exactly what investors were upset with here. The top line looked good, and management actually raised its revenue guidance for the fiscal year from the previously forecast $571.5 million to $573.5 million range to a $583.5 million to $584.5 million range. It's likely the heavy losses that investors are worried about because top-line growth came in better than expected. 

Now what

Anaplan has a market cap of $6 billion. Based on its full-year revenue guidance of approximately $584 million, it's trading at a price-to-sales ratio of around 10. That is not cheap. However, if you are interested in this business and think it can continue growing at a solid double-digit percentage rate annually -- and will eventually get to profitability -- then with the stock trading 20% off its highs, now might be the time to buy some shares. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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

Anaplan Stock Quote
Anaplan
PLAN
$45.95 (4.79%) $2.10

*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
633%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

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

Our Most Popular Articles

Premium Investing Services

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