This should help to provide ballast to a stock that has materially underperformed,” Moskowitz wrote. “We expect that all, or virtually all, of the $1 billion proceeds will be used towards share buyback over the near- to medium-term. Not an offer or recommendation by Stocktwits. They have an initial conversion price of $160, which is 30% higher than the volume-weighted average closing price of Splunk’s stock in the 10 days leading up to June 21, per Splunk’s release. Splunk Inc (SPLK) Stock Price Today, News, Quotes, FAQs and Fundamentals. The convertible notes are set to mature in July 2026 and bear 0.75% interest annually. “Having said that, this is a favorable transaction for Splunk, and we commend Splunk’s management team for structuring this deal.” “In and of itself, this transaction doesn’t solve Splunk’s challenges that include a noisy business model transition, somewhat inconsistent execution, and an increasingly competitive landscape,” he wrote. Splunk shares were trading lower after an analyst from UBS said a variety of factors, not just economic challenges, appear to be behind a recent cut to one of the company’s financial forecasts. Mizuho analyst Gregg Moskowitz upped his price target on Splunk’s stock to $150 from $135 following the announcement, and while he saw positives in the new arrangement, he kept a neutral rating on the stock. “Bottom line: we believe the Silver Lake investment helps support our view that Splunk’s business model transition is progressing, the competitive concerns are fully reflected in the valuation, and the recent underperformance was a bit overdone,” Materne wrote, while maintaining an outperform rating and $186 price target on Splunk shares. Hedberg has an outperform rating and $200 price target on the stock.Įvercore ISI analyst Kirk Materne wrote that the Silver Lake agreement “helps reframe” the discussion around Splunk’s risk-reward balance. “Over the past few weeks, we continued to hear from investors that an investment and/or buyback would be a positive signal to the market that the most challenging times of the transition are likely behind them as they look to accelerate adoption of their cloud tech stack,” he continued. Splunk stock remains 54 below its all-time high which was set back in 2020, but its slowly rebounding thanks to a management shakeup. “We see the $1 billion investment as a nice validation point that Splunk is near an inflection point post their subscription transition as we are also bullish on their new Security Cloud offering that launched today in the U.S.,” wrote RBC Capital Markets analyst Matthew Hedberg. Splunk (NASDAQ: SPLK) is a leading provider of ML software. Had each gained about that much in the same time period. Splunk stock has risen about 120% since Merritt became CEO, compared with 125% growth in the S&P 500 index over the same period.The agreement helped breathe some life into Splunk’s stock, which had declined 35% in a 12-month span as of Monday’s close while the S&P 500Īnd the iShares Expanded Tech-Software Sector ETF Splunk reported $605.7 million in quarterly revenue in August, up 23% year over year, while cloud revenue, at $217.4 million, was up 73%.
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Other enterprise software companies, such as Adobe, Autodesk and Microsoft have gone through similar adjustments. The CEO transition is "an additional concern" the company is dealing with, on top of risks such as increasing competition from public cloud providers, entry into the observability market and the ongoing business model evolution, KeyBanc analysts led by Michael Turits, who have the equivalent of a hold rating on Splunk stock, wrote in a note distributed to clients.ĭuring Merritt's tenure Splunk has been shifting more toward providing its software as a cloud service, which has impacted revenue and operating margins. ET In a surprising move, the software giant's CEO stepped down, yet Splunk also preannounced solid financials. Smith is a former chief financial officer of Salesforce who joined Splunk's board in 2011. Current Price 101.44 Price as of June 5, 2023, 10:54 a.m. Merritt joined Splunk as a senior vice president in 2014 after stints at Cisco, PeopleSoft and SAP, and in 2015 he replaced Godfrey Sullivan as Splunk's CEO, who had taken the company public in 2012.
The leadership change creates more uncertainty for a company working to become viewed more like a cloud company than a seller of more traditional on-premises software. Personal Loans for 670 Credit Score or Lower
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