What happened
Shares of Nutanix (NTNX -0.92%) skyrocketed Friday morning after The Wall Street Journal reported that the cloud-computing company is exploring a sale after receiving some takeover interest.
Investors were excited about the potential for the company to make a deal, and had pushed Nutanix's share price up by 23.5% as of 11:23 a.m. ET.
So what
The WSJ article offered no specific details about the possible sale, but referenced "people familiar with the matter" as saying that Nutanix will likely target private equity and industry players.
Image source: Getty Images.
Before Friday, Nutanix's shares were down by more than 40% over the past 12 months. But the morning's gains have helped offset some of that massive decline.
With U.S. inflation at levels not seen in decades and the Federal Reserve rapidly hiking benchmark interest rates in an effort to get that price growth back in check, tech stocks as a class have been beaten down this year. Investors have been fleeing speculative growth stocks in search of safer assets.
Nutanix may look more appealing to potential buyers in the wake of the strong results it delivered on Aug. 31 for its fiscal 2022 fourth quarter.
For the period, which ended on July 31, the company's annual recurring revenue increased by 37% to $1.2 billion, and its free cash flow was $23.2 million -- a notable reversal from its free cash flow loss of $42.2 million a year earlier.
Additionally, management issued guidance for revenue in the range of $1.77 billion to $1.78 billion for its fiscal 2023, higher than analysts' consensus estimate of $1.66 billion.
Now what
While investors are clearly excited about the possibility that the company will be sold, nothing is set in stone yet. If no buyer comes through with an acceptable offer, it's entirely possible that Nutanix's share price gains from Friday could be reversed.
But for now, shareholders should be happy with the stock's quick jump and keep a close eye out for more details about a potential sale.
