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Why Shares of Cloudera, Inc. Fell 17.4% in the First Half of 2018


What happened

Cloudera, Inc. (NYSE: CLDR)  stock lost 17.4% of its value across the year's first two quarters, according to data provided by S&P Global Market Intelligence . As shown in the chart below, most of the company's losses year to date are the result of a big sell-off that occurred in April.

CLDR Chart

CLDR 2018 price change. Data source: YCharts.

Cloudera reported fourth-quarter earnings results on April 3 and actually delivered sales and earnings that came in significantly ahead of the average analyst estimates . However, news that the company was changing its sales strategy and that this would have a significant, negative impact on revenue growth in the near term sent the stock plummeting. Shares lost 34% of their value in April.

Clouds connected by lines.

Image source: Getty Images.

So what

Following the 50% growth for subscription sales that Cloudera posted in fiscal 2018, the company's April revelation that it only expected to grow subscription revenue at a 24% annual rate spooked investors and cast a cloud of uncertainty over the business' outlook. The stock has yet to fully recover.

Cloudera reported first quarter results on June 6, with shares climbing in the lead up to the release and then selling off following the publication of the results. Total revenue for the period was up 29% year over year, while subscription revenue was up 33%. The company reiterated its guidance for 24% subscription revenue growth in fiscal 2019 -- not surprising, but also probably not what shareholders wanted to hear.

Now what

Cloudera stock has regained some ground in July, with shares up nearly 9% in the month as of this writing.

CLDR Chart

CLDR  July price change. Data source: YCharts.

The gains appear to have stemmed from Cloudera posting a series of job listings on LinkedIn and news that the company is partnering with MetiStream to provide machine-learning services to healthcare organizations.

The dynamics that prompted Cloudera to change its sales strategy and replace some of its sales-team management are still somewhat unclear. The company has indicated that its previous sales practices led to new customer additions that were too heavily weighted toward small clients, but investors don't have much visibility as to whether the new sales approach will be more or less effective than the previous one -- making it difficult to determine if the stock is a worthwhile investment at current prices.

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Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Personal Finance , Stocks
Referenced Symbols: CLDR



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