Here’s Why Akamai Stock Has Failed To Outperform The S&P Since 2017
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
- Akamai Stock Has Seen Little Change Since 2021. Will A Q3 Earnings Beat Drive The Stock Higher?
- What To Expect From Akamai’s Q2 Earnings?
- Cloud Business In Focus As Akamai Reports Q1 Results
- Will Akamai’s Cloud Computing Push Pay Off?
- Up Almost 6% Last Month, Can Akamai Continue Its Run?
- After Flat Week, Can Akamai Stock Turn Things Around?
(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