Here’s Why Akamai Stock Has Failed To Outperform The S&P Since 2017

+28.71%
Upside
81.11
Market
104
Trefis
AKAM: Akamai logo
AKAM
Akamai

Akamai Technologies Inc. (NASDAQ: AKAM) stock price gained a little under 30% from $65 in 2017 end to around $82 currently, primarily due to favorable changes in its revenues. During this period, the company also witnessed a 7% drop in its outstanding share count, and despite a drop in the P/S multiple, the company’s stock price has returned 27% since 2017. However, over the same period, the S&P 500 returned around 40%, meaning that Akamai stock has underperformed the index since 2017-end.

In our interactive dashboard, Why Akamai Stock Moved: AKAM Stock Has Gained 27% Since 2017, we break down the factors behind this move.

(A) AKAM’s Total Revenue has increased 44% from $2.5 billion in FY 2017 to $3.6 billion on an LTM basis

  • AKAM’s total revenue has risen consistently from $2.5 billion in FY 2017 to $3.5 billion in FY 2021.
  • Sales have maintained their rise so far in FY ’22, currently standing at $3.6 billion on an LTM basis.
  • Akamai is a content delivery network, cybersecurity, and cloud service company, providing web and Internet security services.
  • The company as of FY ’21 reports sales under only one operating segment: providing solutions to power and protect digital experiences.
  • For additional details about AKAM’s revenues and comparison to peers, see Akamai (AKAM) Revenue Comparison
Relevant Articles
  1. After Flat Week, Can Akamai Stock Turn Things Around?
  2. After Shedding 17% Last Month, Akamai Stock Looks Set To Turn Things Around
  3. Up More Than 10% In A Month, Akamai Stock Looks Unlikely To Continue Its Rally
  4. Down Almost 15% This Year, Is Akamai Stock Set To Bounce On The Back Of Strong Earnings?
  5. Forecast Of The Day: Akamai’s Media Net Revenues
  6. After A Strong Rally Last Month, Akamai Stock Rally To Fizzle Out?

(B) Revenue per share (RPS) increased 54% from $14.53 in 2017 to $22.42 currently

  • AKAM’s revenue rose from $2.5 billion in 2017 to $3.6 billion currently, while the outstanding share count dropped from 171.4 million in 2017 to under 160 million currently.
  • Due to this, RPS has risen from $14.53 in FY ’17 to $22.42 currently.

(C) Price-To-Sales (P/S) multiple for AKAM rose strongly from 4.2x in 2017 to 5.4x by 2021 end, but has pulled back to 3.7x currently, even lower than its 2017 level

  • AKAM’s P/S multiple rose to around 5.4x by late 2021, on the back of rising investor expectations surrounding increased demand for the company’s products and services.
  • However, due to the current geopolitical tensions and increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 3.7x.
  • For additional details about the company stock returns, and comparison to peers, see Akamai (AKAM) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Sep 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 AKAM Return -9% -30% 23%
 S&P 500 Return -4% -21% 69%
Trefis Multi-Strategy Portfolio -6% -21% 213%

[1] Month-to-date and year-to-date as of 9/22/2022
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates