Shares of HubSpot Inc. HUBS declined more than 12% yesterday as various media reports revealed that Alphabet Inc. GOOGL has shelved plans to acquire this customer relationship management (“CRM”) firm. Although spokespersons of both companies have refused to comment on the market speculation, sources familiar with the proceedings have confirmed the same.
HubSpot, headquartered in Cambridge, MA, specializes in providing sales and marketing software to small and midsize businesses, leveraging digital channels such as blogs, search engines and social media. Its diversified offerings include CRM and payment services, making it an attractive asset for Alphabet. The potential deal, reported earlier in April, would have been GOOGL’s largest-ever acquisition, with HubSpot reportedly valuing about $35 billion at that time.
From Alphabet's perspective, acquiring HubSpot would not only have bolstered its presence in the burgeoning CRM software market but also provided a significant boost to its cloud computing business, intensifying competition with industry giants like Microsoft and Amazon. Additionally, the acquisition could have enhanced competition in the marketing and sales software sector, countering the dominance of players like Salesforce and Microsoft.
For HubSpot, an acquisition by Alphabet could have offered access to greater resources and technological capabilities, enabling it to further innovate and expand its market reach. However, with the news of the deal falling flat, HUBS’ shares have taken quite a beating. The stock has lost 8.8% over the past year against the industry’s growth of 29.6%.
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It remains to be seen how this Zacks Rank #3 (Hold) firm addresses this situation to regain its growth momentum.
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