Shares of software-as-a-service company 8x8 (EGHT 6.06%) jumped in early trading Wednesday after it reported better-than-expected results for its fiscal 2022 fourth quarter. But later in the session, the stock gave up most of its early gains, likely on fears of the impacts of inflation.
After rising by as much as 16.8%, the tech stock closed the day up just 1%.
Investors were initially enthusiastic that 8x8's non-GAAP earnings per share of $0.05 beat analysts' consensus estimate for a breakeven quarter.
Adding to the positive news was that sales rose 25% year over year to $181.4 million for the period, which ended March 31. That slightly outpaced Wall Street's average estimate of $181.3 million. CEO Dave Sipes said in a press release that the company "improved non-GAAP operating profitability in every quarter of fiscal 2022 and achieved a non-GAAP operating profit for the year."
But while the company's results were solid, investors were also processing gloomy inflation news. New data showed the Consumer Price Index was up 8.3% year over year in April -- worse than the 8.1% that economists were expecting. This means that inflation continues to persist at a nearly 40-year high.
That news sent the tech-heavy Nasdaq Composite down by 2.5% later in the day and is likely part of the reason why 8x8's stock gave up nearly all of its earlier gains.
8x8 investors should be pleased with the company's latest results, but with the Federal Reserve poised to continue raising benchmark interest rates in its effort to get inflation back down to its target range, they're also likely concerned that the Fed's aggressive moves could potentially overshoot and cause a recession.
And with 8x8's stock already down 71% over the past 12 months, investors should certainly keep an eye on both macroeconomic news and how the company performs in the upcoming quarters.