Stock Story -
What Happened: Shares of business communications software company 8x8 (NYSE:EGHT) fell 39% in the morning session after the company reported second quarter earnings results. Its full-year revenue guidance was below expectations, and its revenue guidance for next quarter missed Wall Street's estimates. In addition, all key operating metrics we track fell below Wall Street's estimates during the quarter, including revenue, billings, ARR (annual recurring revenue), adjusted operating income, and EPS. Overall, this was a weaker quarter for 8x8.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy 8x8? Find out by reading the original article on StockStory, it's free.
What is the market telling us: 8x8's shares are very volatile and over the last year have had 48 moves greater than 5%. But moves this big are very rare even for 8x8 and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move we wrote about was 23 days ago, when the stock gained 12.9% on the news that the company announced that it has secured a new $200 million Term Loan Credit Facility. The company intends to use the proceeds from the loan plus $25 million from existing cash balances to fund the prepayment of the $225 million outstanding under its existing Term Loan maturing August 3, 2027.
The interest rate on the new credit term is expected to be approximately 3.6% lower than its existing term loan. This is a positive for the company as it expects the refinancing to result in "significant cash interest expense savings for the duration of the term loan."
8x8 is down 51.2% since the beginning of the year, and at $1.79 per share it is trading 57.5% below its 52-week high of $4.21 from August 2023. Investors who bought $1,000 worth of 8x8's shares 5 years ago would now be looking at an investment worth $71.57.
