Why Did Elastic Stock See A Big Correction Last Week?

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Elastic (NYSE: ESTC) is a company that primarily sells software as a service (SaaS) solutions that cater to search, logging, security, and analytics applications. While Elastic has been posting robust growth (revenues projected to rise ~50% in FY’20), the company saw its stock decline by 16% over the last week. Investors appear to have turned more cautious about high-growth software stocks, amid macroeconomic uncertainty with the ongoing trade war between the U.S. and China and the possibility of a recession. Elastic stock trades at about 14x its projected FY’20 revenues (FY ends April), and remains loss-making, implying that investors could view it as being a risky bet in the current environment. Below, we take a look at the company’s financial performance over the last few years and the outlook over 2020 and 2021.

View our interactive dashboard analysis on Why Has Elastic Stock Been Trending Lower?

How does Elastic’s Revenue Growth in 2019 compare with that in prior periods and what’s the forecast?

Total Revenue for Elastic increased from $160 Mil in FY’18 to $272 million in FY’19, an increase of 70%. We expect Total Revenue growth to be 50% in 2020.

How does Elastic’s Total Expense Growth in 2019 compare with that in prior periods and what’s the forecast?

Total Expense for Elastic increased from $209 million in FY’18 to $370 million in FY’19. We expect Total Expense to grow by 37% in FY’20.

How does Elastic’s Loss Before Income Taxes Growth in 2019 compare with that in prior periods and what’s the forecast?

Loss Before Income Taxes for Elastic increased to $98 million in FY’19, from around $49 million FY’18.

We expect Loss before income taxes to come in at $99 million in FY’20.

How do Elastic’s Net Income and EPS in 2019 compare with that in prior periods and what’s the forecast?

For more information on Elastic’s Net Income and EPS, view our interactive dashboard analysis.

 

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