Investors haven't been too pleased with the way the end of 2022 has shaped up so far, with major stock market benchmarks having fallen sharply on Thursday. News of a slowing of inflation as shown by personal consumption expenditures was welcome, but the positive response it inspired on Wall Street was somewhat muted. Stock index futures traded on either side of the unchanged mark at various points during the early morning session on Friday.
Even as most investment professionals prepared for what's often a quiet pre-holiday trading session, a couple of stocks posted significant losses. Shares of Nutanix (NTNX 7.41%) and Mission Produce (AVO 0.19%) took big hits Friday morning, and shareholders are having to deal with some disappointment that might linger into 2023.
Nutanix might have to go it alone
Shares of Nutanix dropped 12% in premarket trading Friday morning. Investors in the enterprise cloud software platform provider have hoped that it might be successful in finding a potential buyer, but those efforts might have taken a serious setback recently.
Nutanix is apparently no longer in discussions with HP Enterprise about a potential takeover, according to reports from early this morning. The news comes after Nutanix stock had jumped sharply in mid-October on speculation that industry peers or private equity investors might be interested in buying the company.
Fundamentally, Nutanix has been doing its best to keep growing and improving its financial performance. The company's fiscal first-quarter financial results for the period ending Oct. 31 included a 27% rise in annual contract value billings year over year, along with a 34% jump in annual recurring revenue. Most importantly, Nutanix reversed a year-earlier loss with a modest adjusted profit during the quarter, and free cash flow went positive for the period as well.
Rising levels of merger and acquisition activity in the software-as-a-service space have made investors more bullish about several companies. Yet in Nutanix's case, finding a buyer might not be as important as continuing to move forward with its growth initiatives.
Falling avocado prices spoil Mission Produce's quarter
Meanwhile, shares of Mission Produce were down 14% in premarket trading. The avocado sourcing, production, and distribution specialist reported fiscal fourth-quarter financial results for the period ending Oct. 31 that showed a rare disinflationary trend that weighed on sales and earnings.
Mission reported revenue of $238 million for the quarter, which was flat year over year. Average avocado selling prices were down 10%, although a 6% increase in sales volume helped to offset the negative impact of falling prices to some extent. Adjusted net income of $9.2 million was down 46% from year-ago levels.
The company has worked hard to diversify its exposure to the global avocado market, particularly by starting a program of production in Peru. Because Peru's growing season is different from that of the core Mexican avocado market, Mission has been able to get high-quality fruit even during the off-season for Mexican production. Moreover, as it builds out its infrastructure for ripening and distribution, Mission has increasingly been tapping new markets in Europe and Asia to add to its North America exposure, particularly as interest in vegetarian and vegan food options rises.
Mission is optimistic that conditions in 2023 could return to a more normal marketplace that would help it stand out from its competition. A lot will depend on the key NFL playoff season, which is a big one for avocado sales, and shareholders seem nervous that times might not get better as quickly as Mission hopes they will.