Freshworks Stock Tumbled 25% – Opportunity or Trap?
Freshworks (FRSH) stock has fallen by 25.0% in less than a month, from $10.78 on 30th Jan, 2026 to $8.08 now. Should you buy this dip?
Dip buying is a viable strategy for quality stocks that have a history of recovering from dips. As it turns out, FRSH stock passes basic quality checks. But the bad news is that historically, the median return for the 12-month period following sharp dips was -6.8%, with median peak return of 14%. We define sharp dip as stock going down 30% or more, in less than 30 day period.
Below, we get into details of historical dips and subsequent returns.
Historical Median Returns Post Dips
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| Period | Past Median Return |
|---|---|
| 1M | -4.5% |
| 3M | -9.7% |
| 6M | -9.4% |
| 12M | -6.8% |
Historical Dip-Wise Details
FRSH had 4 events since 1/1/2010 where the dip threshold of -30% within 30 days was triggered
- 14% median peak return within 1 year of dip event
- 128 days is the median time to peak return after a dip event
- -22% median max drawdown within 1 year of dip event
| 30 Day Dip | FRSH Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | FRSH | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | -7% | 14% | -22% | 128 | ||||
| 2052026 | -31% | -1% | -11% | 2% | -21% | 1 | ||
| 6042024 | -30% | 6% | 24% | 56% | -14% | 238 | ||
| 5092022 | -30% | -12% | -3% | 25% | -23% | 269 | ||
| 12032021 | -37% | -0% | -50% | 3% | -62% | 18 | ||
Freshworks Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 18.2% | Pass |
| Revenue Growth (3-Yr Avg) | 19.9% | Pass |
| Operating Cash Flow Margin (LTM) | 27.3% | Pass |
Not sure if you can take a call on FRSH stock? Consider portfolio approach
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