While investors didn’t see that many volatile stocks towards the end of last week, one of the big movers prior to the weekend was Yext (NYSE: YEXT). For those that haven’t heard of the company before, Yext is a cloud software provider specializing in search data and a company that often goes unnoticed by traders. However, shares of the stock moved big-time after announcing weaker than expected Q3 results, as well bearish comments from Wall Street analysts in regards to the company’s future.
There aren’t many dedicated search engine software providers on the market, with Yext being one of the only companies out there that fit this definition. Despite offering a relatively niche service, Yext hasn’t done that well over the past year, in spite of most techs reporting significant growth. It’s most recent Q3 results saw revenues grow to $89 million, up 16.7% from last year. However, this was just slightly below what most Wall Street analysts were expecting.
At the same time, Yext is still reporting a net loss of around $22 million. While an improvement from the $42.7 million loss reported last year, the fact the company is still losing money isn’t helping its stock price either.
Although these results weren’t bad in and of themselves, the rather mediocre results, especially compared to the other soaring tech stocks out there on the market, have led to many investors becoming worried about Yext’s prospects. More than anything, analysts are worried that demand for the company’s product isn’t all that strong in the first place.
“It’s questionable whether Yext’s Answers search product can carry the growth baton. We see risk of another downtick in net retention and new [annual recurring revenue], as the U.S. enters more lockdowns and economic uncertainty remains high,” said Morgan Stanley analyst, Stan Zlotsky, in a comment just before the weekend. He maintains his “sell” rating for the stock, advising investors to exercise caution with Yext. “Investors are likely to wait for evidence that demand for Answers can improve the trajectory of these metrics.”
While some other analysts aren’t as bearish about the company’s prospects, almost all those covering the stock ended up slashing their price targets following these Q3 results.
Shares of Yext ended up tumbling around 18.9% on the bad news. While still relatively the same in comparison to where it was at the beginning of this year, Yext seems to be one of few niche tech stocks that are falling out of favor among investors. Especially since there are so many more lucrative choices out there to invest in.
Yext Company Profile
Yext Inc provides a knowledge engine platform that lets businesses manage their digital knowledge in the cloud and sync it to over 100 services including Apple Maps, Bing, Cortana, Facebook, Google, Google Maps, Instagram, Siri and Yelp. Digital knowledge is the structured information that a business wants to make publicly accessible. The company also makes search intelligent by helping to provide precise, accurate and current answers to location-based queries that are conducted across the web and mobile applications and voice and artificial intelligence, or AI, engines. The company derives its revenues primarily from subscription services. – Warrior Trading News
