Freshworks’ market cap slumps by nearly $5 billion

TE Raja Simhan | | | Updated on: Dec 02, 2021
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Analysts attributed the slump in the stock price to the losses reported by the company in the third quarter

As the stock price of Freshworks hit a record low on Wednesday on the Nasdaq, the company's market cap slumped by nearly $5 billion to $8.12 billion from a high of over $13 billion when the stock got listed on September 22.

Freshworks got listed at $43.5 with a market cap of over $13 billion. However, after lots of volatility in the last few days, the stock price declined to a record low of $30.85 on Wednesday (market cap of $8.12 billion), down by 12.41 per cent when compared to the previous day. The company's stock price saw a 52-week high of $53.35 and a low of $33.73, according to information on the Nasdaq website.

Third quarter loss

Analysts attributed the slump in the stock price to the losses reported by the company in the third quarter. There was also selling pressure from new shares that entered the public trading markets. The terms of Freshworks' IPO allowed 58 million shares to open for trading on November 4, ending part of its lock-up period that restricts insiders from selling stock for a time after the IPO, says a report by The Motley Fool Stock Advisor on November 5.

Management is predicting sales of between $99 million and $101 million in the fourth quarter. That growth, plus encouraging engagement metrics, including high contract renewal rates, implies a strong year ahead for market share gains.

Investors have to balance that optimism against the likelihood for more losses as Freshworks invests in its growth initiatives. The stock price should stay volatile, too, as more shares become available for trading by insiders and as Wall Street tries to settle on a valuation for this young IT software business, the report said.

Source: Nasdaq

Published on December 02, 2021

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