What happened
Growth-dependent tech stocks got off to a rough start this week, but they're regaining some of their lost ground in Thursday's trading. Among them, Appian (APPN +1.89%) was up roughly 6.3% as of 1 p.m. ET, while the technology-heavy Nasdaq Composite index was up roughly 1.5%.
There wasn't any company-specific news pushing the low-code software specialist's share price higher. It appears the stock is simply benefiting as the market rebounds a bit from its recent sell-offs. A new unemployment update from the Labor Department may also be factoring into the rally.
Image source: Getty Images.
So what
Growth-dependent tech stocks sank early in this week's trading as investors continued to react to rising Treasury bond yields, the Fed's plans to raise benchmark interest rates this year, and other macroeconomic factors. But on Thursday, the Labor Department published its report on jobless claims for the week ending Jan. 15, showing 286,000 new unemployment claims had been filed in the period. The average prediction for the week among economists surveyed by Dow Jones had been for just 225,000 new claims.
With that unexpected jump, new unemployment claims hit a three-month high. However, this may be a case where bad news is good news for the market, at least as far as the near-term trading backdrop for stocks goes. It's possible that investors think that the worse-than-anticipated jobless number may prompt the Fed to take a more temperate approach to raising interest rates and cutting back on its other economic stimulus initiatives.
Now what
Appian stock is down roughly 13.4% so far in 2022, while the Nasdaq Composite index has slid by roughly 6.7%. The software company now has a market capitalization of roughly $4 billion and is valued at approximately 9.5 times this year's expected sales. That valuation sets the stock up for volatile trading amid wavering appetite for software businesses that aren't posting significant profits.
Appian posted a non-GAAP (adjusted) operating loss of $15.9 million on revenue of $92.4 million in the third quarter. Sales were up 20% year over year, and cloud subscription revenue climbed by 36%, but the results arrived with a wider-than-expected loss, and management's guidance was underwhelming.
Investors won't have to wait long to get a fresh look at how the business is faring. Appian is scheduled to publish its fourth-quarter and full-year results after the close of trading on Feb. 17. Its most recent guidance calls for sales growth of 32.5% and an adjusted loss of $0.225 per share at the midpoint. I own Appian stock and continue to like its long-term chances, but investors should move forward with the understanding that shares could experience more volatility.
