What happened
Shares of communications software outfit Bandwidth (BAND +3.00%) were up 6.4% today as of 12:55 p.m. ET. It's some reprieve for shareholders after the stock lost half its value in 2021. Bandwidth remains about two-thirds of the value it was at its all-time peak in late 2020, when cloud-based communications companies were flying high early on in the pandemic.
So what
There was no specific news from Bandwidth today to cause the jump in price. However, the company is still forecasting robust growth for its software offerings, even though its stock endured a brutal 2021. Management has said to expect year-over-year revenue growth of as much as 7% in the fourth quarter of 2021, and as much as 42% for full-year 2021. Bandwidth should be releasing its final results in late February.
Image source: Getty Images.
Now what
It's been a strange year for many cloud computing companies. Their financials boomed in 2020, leading to some difficult year-over-year comparisons in 2021 as some customer demand was pulled forward by the pandemic. Nevertheless, Bandwidth -- which lists many big cloud-based communications providers including Zoom Video Communications and Microsoft among its customers -- is still expected to grow. The preliminary consensus among Wall Street analysts is for a high-teens percentage rate of sales growth in 2022.
Bandwidth management will no doubt provide its own preliminary guidance during the next earnings update. If the company is indeed still in growth mode, shares could be a real value right now at just 3.6 times expected full-year 2021 revenue. The stock has been punished, and some investors are scooping up some shares today, likely the cause for the one-day rally. If you decide to buy, too, just bear in mind this is a tiny software outfit. Expect shares to be highly volatile again in the year ahead.
