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A Promising Stock Eclipsed by Volatility

Even after witnessing extreme volatility since its listing on the Nasdaq in September 2021, software as a service (SaaS) provider Freshworks, Inc. (NASDAQ: FRSH) is determined to expand its presence with new deals and agreements.

Freshworks offers a Saas platform that allows small and medium-sized businesses to enhance employee and customer experience. Now, let’s learn more about this California-based company.

Freshworks sold 28.5 million shares at $36 per share during its initial public offering (IPO) to raise more than $1 billion. Following its listing on September 22, the stock jumped to $49.25 the next day.

It reached an all-time high of $53.36 on November 2. Thereafter, the stock price started falling, and the stock plummeted to its all-time low of $10.51 last month.

Recent Developments at Freshworks

On July 26, Freshworks signed a distribution agreement with an Indian cloud infrastructure and managed services provider, ZNet Technologies. As per the terms of the agreement, ZNet’s product portfolio will feature Freshworks’ customer relationship management software, Freshsales, and its omnichannel helpdesk software, Freshdesk.

Varun Vig, the Head of Channels & Alliances for Freshworks APJ, India and MEA, said, “Coupled with ZNet’s strong reach in the India market will help us scale our business and build lasting customer relationships in the region.”

Freshworks to Announce Q2 Results Next Week

Freshworks is scheduled to release its second-quarter results on August 2. Analysts expect the company to record a loss of $0.07 per share, marginally narrower than the year-ago loss of $0.08 per share.

The company anticipates adjusted loss to range from $0.06 per share to $0.08 per share and revenues between $117 million and $119 million.

In the first quarter, Freshworks posted a loss of one cent per share, compared to a loss of two cents in the previous year and the Street’s loss estimate of five cents. Revenue rose 42% year-over-year to $114.6 million. The number of customers with annual recurring revenue (ARR) of over $5,000 increased 27% to 15,639.

Along with the first-quarter results, the company also provided guidance for full-year 2022. Total revenues are expected in the range of $495.5 million to $501.5 million, and adjusted loss is anticipated between $0.16 per share and $0.18 per share.

FRSH Stock Has over 80% Upside Potential

Recently, Brent Bracelin of Piper Sandler (NYSE: PIPR) maintained a Buy rating on the stock but lowered the price target to $20 from $28 (70.7% upside potential).

In a research note to investors, the analyst said, “Software subscription models with 85%-plus recurring revenue streams, high gross margins, and secular tailwinds tied to cloud and digital might be better positioned to weather economic storms than cyclicals.”

On TipRanks, the stock has a Moderate Buy consensus rating based on seven Buys and four Holds. FRSH’s average price target of $22.64 implies 81.12% upside potential from current levels.

Hedge Funds Raise Stake in Freshworks

TipRanks’ Hedge Fund Trading Activity tool shows that the confidence in FRSH is currently Very Positive, as the cumulative change in holdings across all nine hedge funds that were active in the last quarter was an increase of 3.5 million shares.

Concluding Thoughts

Freshworks has either surpassed or met expectations in the three quarters for which it has reported results after the launch of its IPO. If the trend continues, FRSH stock, which has lost almost 55% so far this year, will likely receive a much-needed boost.

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