Tuesday, June 5, 2012

Splunk Gets Splattered On Earnings


Splunk (SPLK) reported earnings after the close Thursday that easily beat analyst estimates. The stock though plunged down 16% on Friday. Whether this was due to the weak market or disappointment that the company didn't guide even higher is difficult to determine. Either way it shows the difficulties of owning high valuation IPOs going into the first earnings report.

Previously hot IPOs such as Jive Software (JIVE), Millennial Media (MM) and even InvenSense (INVN) plunged after disappointing earnings reports.

Clearly investors expected too much out of these stocks as even 80% revenue growth for Splunk wasn't enough to keep the stock higher. All of the previously mentioned stocks have collapsed roughly 50% from post IPO highs, so the downside risk in Splunk could be substantial. A similar drop would be another $9 for the stock.

Read the full article on Seeking Alpha.


Disclosure: No positions mentioned. Please review the disclaimer page for more details. 




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