The stock market's turbulence has continued in February, with successive waves of optimism and pessimism vying for supremacy and leaving major market benchmarks seeing considerable volatility. Investors looked uncertain heading into a new week, with futures on the Nasdaq Composite (^IXIC 0.55%) index falling just 7 points to 14,234 as of 8 a.m. ET.
The peak of earnings season is past us, and so investors are now moving to pay more attention to extraordinary company-specific news. Splunk (SPLK -0.14%) shares were on the rise on Monday morning in the premarket session, but Affirm Holdings (AFRM 9.47%) added to its recent losses as naysayers piled on in their concerns about the buy now, pay later specialist. Read on to learn more about these two stocks and their impact on the broader market.
Is Splunk for sale?
Shares of Splunk jumped 9% in premarket trading on Monday morning. The move came as shareholders pondered the possibility that the data platform provider might become the latest acquisition target in the technology industry.
The news on Splunk actually came out late Friday, when reports suggested that Cisco Systems (CSCO 0.19%) had made an offer to buy the company. According to the reports from The Wall Street Journal, Cisco might have offered more than $20 billion in a buyout bid for Splunk. The two companies apparently are not actively talking about an acquisition at this point, but the rise in Splunk's share price Monday morning puts a nearly $20 billion market capitalization on the stock, showing that investors are seeing the reports as credible.
Splunk has had to deal with some challenges above and beyond the general pressure on high-growth tech stocks recently. Splunk CEO Doug Merritt resigned in November, just as the company was working through attempts to make a full transition toward offering its software as a subscription-based cloud service rather than through licensing arrangements.
Meanwhile, a potential deal would make a lot of strategic sense for Cisco, which has aimed to move beyond its historical emphasis on hardware to incorporate more software and services offerings. It's too early to tell whether anything will come of this takeover speculation, but it'll be interesting to see how the news plays out in the days and weeks ahead.
Analysts deny Affirm
Elsewhere, shares of Affirm Holdings were down another 4% in premarket trading Monday morning, adding to their losses of more than 20% on Friday. After having failed to give investors the confidence they wanted to see in its latest quarterly financial report, Affirm faced adverse comments from several Wall Street analysts.
A pair of reductions in price targets weighed on sentiment about Affirm. At Barclays, analysts slashed their expectations about Affirm's stock price performance by $40 per share, cutting targets from $105 to $65. The only consolation was that Barclays still kept its overweight rating on the stock, despite its recent plunge. Meanwhile, analysts at Mizuho reduced their price target from $100 to $77 per share, making an apparent about-face after comments late last week asserting that the stock price could still double from present levels.
Affirm's mixed results prompted the big decline on Friday. Although revenue jumped even more than expected, Affirm's losses widened dramatically. Moreover, fears about rising inflation and interest rates are weighing on the buy now, pay later company.
Value investors often look at beaten-down stocks as opportunities for a turnaround. Yet analysts don't seem entirely convinced, and Affirm's shares might not yet have hit bottom.