Wednesday's Headlines: CrowdStrike Slides on Weak Guidance

Wednesday's Headlines: CrowdStrike Slides on Weak Guidance

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Under Armour (UAA) +4.8%

Trex (TREX) +4.3%

Farfetch (FTCH) +3.9%

Retail Opportunity Investments Corp (ROIC) +3.9% Group (TCOM) +3.9%

Moving Down ⬇️

Calavo Growers (CVGW) -4.1%

Baozun (BZUN) -3.6%

Atlassian (TEAM) -3.5%

MercadoLibre (MELI) -3.5%

Snowflake Inc. (SNOW) -3.2%


AMC Networks Announces Widespread Layoffs 🎥

Entertainment company AMC Networks — no relation to the meme stock AMC Entertainment Holdings — has indicated to employees that it’s set to cut close to 20% of its U.S. workers as it scrambles to offset rising costs. This comes following the shock announcement of the resignation of its CEO, Christina Spade, who had only taken over the position less than three months ago.

In a memo sent Tuesday to the company by Chairman James Dolan, it was stated that:

“It was our belief that cord cutting losses would be offset by gains in streaming. This has not been the case. We are primarily a content company and the mechanisms for the monetization of content are in disarray.”

The company’s streaming arm has so far struggled to make up for the shortfall in cable TV subscriptions. The streaming space remains a tough one to crack, with even titans like Netflix and Disney+ suffering in recent times. Dolan went on to describe the current environment as a “confusing and uncertain time” for the television industry at large.

AMC Networks is currently down over 47% year-to-date and over 77% off all-time highs experienced in mid-2015. Recently, the company has been touted as a possible acquisition target for larger networks, with speculation arising earlier this year of a potential buyout by Starz.


Workday Shares Pop on Strong Results 💼

Shares of Workday are up nearly 10% in pre-market trading today after the company posted quarterly results that beat investor expectations on both the top and bottom lines.

The workplace management software company brought in revenue of $1.6 billion for the quarter — up 20% year-over-year. That was $10 million more than analyst’s estimated. Non-GAAP earnings per share were 99 cents, 15 cents higher than expected.

Subscription revenues of $1.43 billion were up 22% year-over-year.

"Our strong third-quarter results illustrate how global organizations are continuing to choose Workday as the backbone of their digital transformation in the face of constant change," said Chano Fernandez, co-CEO, Workday.

Management also approved a $500 million share buy-back program.

“This program is a direct reflection of our belief that our shares are undervalued, and a demonstration of our confidence in the business and the long-term opportunity ahead," said Barbara Larson, CFO.

Despite a recurring revenue model and high customer retention, Workday has not been immune to the recent selloff in technology stocks. The company has seen its share price drop over 50% in the last year as sales cycles extend and growth slows.


CrowdStrike Slides on Weak Guidance 📉

Shares of CrowdStrike (CRWD) are falling in pre-market trading after last night’s earnings report. The cybersecurity pioneer is down as much as 20% thanks to management’s forecast of a slowdown in annual recurring revenue (ARR) growth for the coming quarter. The blame for the deceleration is, surprise surprise, thanks to the macro outlook as businesses pull back on expenditure. CEO George Kurtz stated:

“Increased macroeconomic headwinds elongated sales cycles with smaller customers and caused some larger customers to pursue multi-phase subscription start dates, which delays ARR recognition until future quarters”.

As one of the more expensive stocks on the market with a lofty price-to-sales ratio well into the double digits, any sign of a wobble from CrowdStrike was sure to cause a major sell-off. It was not all doom and gloom though, as revenue, EBIT, net income and free cash flow this quarter all came in ahead of expectations.

On the call, management gave rough guidance for fiscal 2024, expecting revenue and ARR growth in the low-30s (%), operating margin expansion, and a path to 30% free cash flow margins. It also expects to slow down hiring in the coming year after significant headcount expansion.