Should you plunk down your money on Splunk? And if you’re already invested in Splunk stock, should you stay the course or take the money and run? Need we say more? The Takeaway on Splunk Stock The total quarterly revenues were up 2% year-over-year, while the cloud-business revenues were up 81%. The numbers pretty much speak for themselves. If you need proof of that, check out Splunk’s revenues from the company’s fiscal first quarter of 2021. As far as taking a new position goes, it might be better to wait for a sizable share price dip.Īt this point, a long position in Splunk shares is basically a bet on the company’s cloud business. It’s also a fairly compelling reason to take profits on Splunk stock if you’ve already met your profit target. That’s not a combination that’s likely to appeal to value-focused investors. So what we have here is a company that’s not profitable, but whose shares are trading not just near their 52-week high, but close to their all-time high price. On the fiscal front, another important thing to understand about Splunk is succinctly reported by Markoch: “Despite multiple years of more than 25% in revenue growth, Splunk is not yet profitable.” That’s not necessarily a bad thing, but it’s worth noting. If you’re invested in Splunk stock now, please understand that you’re taking a stake in a company that’s different than it was a year ago or even six months ago. Thus, the company is rolling out its latest round of enhancements to Splunk Cloud, Splunk Connected Experiences, and Splunk Data Stream Processor.Ĭhief Product Officer Sendur Sellakumar emphasized the need for Splunk’s clientele to adapt, just as his own company is attempting to do: “As organizations evolve, they face many challenges including the transition from on-premises to the cloud, which increases operational complexity … With Splunk’s cloud and platform solutions, organizations can minimize those complexities and make the shift to the cloud with high scale and performance in order to achieve business value much faster.” To that end, Splunk recently announced cloud-enhanced upgrades to the company’s current offering of core platform solutions. For Splunk, pivoting to the cloud could provide a competitive advantage as the work-from-home paradigm is likely to persist for a while. Thus, we can’t really blame businesses for doing what it takes to adapt and adjust in the face of sweeping changes in the economic landscape.Īs InvestorPlace contributor Chris Markoch explains, Splunk’s primary line of business is “to help customers analyze data and generate solutions based on that analysis.” However, Splunk certainly isn’t the only competitor in the data visualization space.Īmid the coronavirus pandemic, businesses need something to differentiate themselves in order to create an economic moat. The novel coronavirus crisis has forced many companies to change their business models or get left behind. If you’re on board with that, then it could make sense to hang on to Splunk shares even at a relatively high valuation. Moreover, investors should be aware that the company’s undergoing a shift in its business model. To help you make the most informed decision, it’s important to examine Splunk’s fiscal health. After all, “buy high, sell higher” does work sometimes.īut the price action doesn’t tell the whole story. Taking profits now might not seem like a great idea if you’re expecting much more upside in the near-term. Other enterprise software stocks also saw strong gains on Thursday, including Salesforce ( CRM), Hubspot ( HUBS) and Snowflake ( SNOW), among others.That being said, there could be more gains ahead for Splunk. Oracle ( ORCL) shares gained more than 3% on Thursday, adding to gains seen earlier in the week. Oracle ( ORCL) CTO and founder Larry Ellison said Oracle’s Gen2 Cloud has become "the number one choice for running Generative AI workloads." Last month, Splunk topped first-quarter estimates and guidance for the upcoming period.Įarlier in the week, Oracle ( ORCL) reported fourth-quarter results that beat expectations, aided by strong results in cloud services and license support revenue. San Francisco-based Splunk ( SPLK) builds software for searching, monitoring, and analyzing machine-generated data. EST, more than 2M shares of Splunk ( SPLK ) changed hands, more than the average daily volume of just under 1.5M. Splunk ( NASDAQ: SPLK) shares rose more than 7% on Thursday, buoyed by investor optimism that the Federal Reserve will engineer a soft landing and investors continuing to buy stocks related to artificial intelligence. David Tran/iStock Editorial via Getty Images
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