Poet Technologies (POET +4.34%) stock is getting hit with a big valuation pullback in Thursday's trading. The company's share price was down 7.3% as of 2:30 p.m. ET and had been down as much as 15.7% earlier in the day.
Poet's valuation is taking a big step back today as investors react to a big quarterly report in the software industry and other catalysts. Despite the big pullback today, Poet stock is still up 61% over the last week of trading.
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Poet slumps after big run up
As of 2:30 p.m. ET, the S&P 500 index's level was down 0.4%. Meanwhile, the Nasdaq Composite's level had fallen 0.9%. While lingering concerns about the outlook on the Iran war and its effects on supply chains and macroeconomic trends are contributing to today's bearish volatility, the reaction to ServiceNow's recently published first-quarter results may be an even bigger catalyst.
The software-as-a-service (SaaS) company posted non-GAAP (adjusted) earnings of $0.97 per share on sales of $3.77 billion. The business's earnings performance met Wall Street's target, and revenue came in $20 million higher than expected -- but some aspects of guidance rattled investors' confidence.
NASDAQ: POET
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What do ServiceNow's results mean for Poet?
While ServiceNow guided for its adjusted gross margin to come in at 81.5% this year, the average analyst estimate had called for a gross margin of 82.1%. Investors have been jumpy when it comes to valuations for SaaS companies in light of potential disruptive risks posed by artificial intelligence, and the company's guidance is seemingly being interpreted as a sign of weakening pricing power.
As a provider of optical technologies used to support AI networks, it's hard to get a read on exactly what ServiceNow's moderately lower projected gross margin could mean for Poet. On the other hand, Poet has already seen impressive valuation gains over the last week -- and the big pullback for tech stocks today is more so an indication that investors are adopting more cautious positioning on the sector at large than a reaction to a shift in the business's prospects.
