Why Shares of Pure Storage Plunged Today
Image Source: Pure Storage.
What: Shares of Pure Storage (NYSE: PSTG) slumped on Friday following a negative analyst report. At noon EDT, the stock was down about 14%.
So what: OTR Global released a report on Pure Storage on Friday, downgrading its rating on the stockto "negative."With the company coming off a first-quarter earnings report that lacked full-year guidance, this piece of bad news was enough to send the stock tumbling.
Pure Storage reported its results on May 26, beating analyst estimates for both revenue and earnings, and matching estimates for second-quarter guidance. But the company failed to provide sales guidance for the full year, which ends in January. Pure Storage provided full-year revenue guidance of $685 million to $725 million in its fourth-quarter report in March, so the lack of updated guidance suggests that the company may come up short of that range.
Now what: Shares of Pure Storage are now down considerably since the company went public. Since peaking soon after its IPO, Pure Storage stock has lost about 42% of its value.
With a lack of sales guidance, investors may be expecting the company's rapid revenue growth to slow down. Analysts' upgrades and downgrades should always be taken with a grain of salt, but in this case, there appears to be a good reason for downgrading the stock.
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