What happened

Shares of Appian (APPN 0.19%) were falling today, in line with a broad sell-off in growth stocks after the Federal Reserve raised the federal funds rate 75 basis points to 3%-3.25% yesterday. 

Though there was no company-specific news out on Appian today, the interest rate hike and comments from Fed Chair Jerome Powell that rate hikes would persist until inflation was brought under control pushed Appian shares lower.

As of 2:03 p.m. ET, the stock was down 6.6%.

So what

As an unprofitable growth stock , Appian is more sensitive to interest rates than most stocks. That's because as interest rates go up, so does the discount rate in its financial model, which means that earnings in the distant future are worth less.

Appian shares may also be falling because fears of a recession are on the rise after yesterday's announcement, as Powell essentially said that the central bank would continue to raise rates even if it led to rising unemployment and a slowdown in the economy.

As a maker of low-code software for big businesses, Appian is sensitive to the business cycle, though CEO Matt Calkins has said his company is ready for an economic downturn as it's prepared a sales pitch focused on efficiency and cost savings, and it also acquired a process mining company, Lana Labs, last year in order to provide upstream capabilities to its customers. Process mining, which helps make workflows more efficient, is a natural step before implementing low-code workflows.

Now what

While the macro environment may present challenges to both Appian's business and the stock price, the company got some good news last week after a Virginia court issued final judgment in its $2.036 billion award in a case involving theft of trade secrets by its chief competitor, Pegasystems.

Though the appeals process could drag out for years, investors shouldn't ignore the award, especially since Appian's market cap is now just $3.1 billion, effectively meaning the business is valued at just $1 billion as long as the verdict isn't overturned. While investors should keep an eye on rising interest rates, that award should help put a floor under the stock.