What Occurred:
New Relic (NYSE:NEWR), an application performance management software company, saw a 5.97% drop in pre-market trading after the company released Q4 earnings that exceeded analyst estimates for revenue and earnings per share (EPS). Despite increased gross margin and strong free cash flow, which defied the trend of cash burn seen in preceding quarters, sales guidance for the next quarter and the full year failed to meet consensus expectations. The weak sales outlook created worry among the investors, although bottom line counseling remained strong. The market was primarily concerned about the poor sales outlook, but the management provided information about the transition to a consumption-based model, which has impacted the topline.
What the Market is Indicating:
New Relic’s share prices are volatile; over the previous year, the stock has experienced 22 changes exceeding 5% each. Today’s decline indicates that the market regards this news as important but not significant enough to fundamentally alter its view of the company.
New Relic stock is currently trading at $78.36 per share, up 39.2% since the beginning of the year, nearing its 52-week high of $84.95 recorded in May 2023. Investors who purchased $1,000 worth of New Relic stock five years ago would now own an investment worth $812.92.
Are you interested in investing in New Relic amid the current market situation? Access our full analysis of the earnings results here for free.
