Shares of Confluent (CFLT 7.59%), a data streaming company, were tumbling today after it reported its fourth-quarter results. While the company beat analysts' consensus estimates for both revenue and earnings, investors might be reacting to Deutsche Bank analyst Patrick Colville cutting his price target for Confluent's shares.
The tech stock was down by 20.2% as of 11:17 a.m. ET on Friday.
Confluent's non-GAAP loss per share of $0.19 in the fourth quarter was better than analysts' consensus estimate of a loss of $0.21. The company's revenue of $120 million also outpaced Wall Street's expectation of $109.8 million.
CEO Jay Kreps said in a press release, "Our accelerating growth throughout the year, highlighted by a 200% increase in full year 2021 Confluent Cloud revenue at large scale, shows that Confluent has emerged as the leader of this large and growing market."
But investors appeared to be paying more attention today to comments from Colville, who said he was disappointed that Confluent's cloud revenue increased by "just" 26% sequentially. As a result, he lowered his price target for the stock from $84 to $63, but maintained his hold rating. It's worth pointing out that on year-over-year basis, Confluent's cloud sales were up by 211%.
Confluent's management issued fiscal-year 2022 revenue guidance of $542 million at the midpoint, which would represent a year-over-year increase of 39%. That outlook might have disappointed investors, considering that total revenue grew 64% in fiscal 2021.
Long-term investors might want to be patient before making any investment decisions based on the company's fourth-quarter results or because of an analyst's comments. A better approach could be to ride out today's drop and continue to watch what happens with Confluent's total revenue and cloud sales in the coming quarters.