Stock Story -
What Happened: Shares of online reputation and search platform Yext (NYSE:YEXT) jumped 12.9% in the morning session after Reuters reported that the company is exploring a sale after attracting takeover interest. The sources also cautioned that the company may not proceed with any deal.
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What is the market telling us: Yext's shares are somewhat volatile and over the last year have had 14 moves greater than 5%. But moves this big are very rare even for Yext and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 24.2% on the news that the company reported fourth-quarter results with revenue exceeding expectations by a narrow margin, though EPS came in well ahead of Wall Street's estimates. Yext produced $14.8 million of adjusted EBITDA (vs estimates of $12.6 million), partly thanks to a huge year-on-year increase in its gross margin, which expanded from 74% to 78.6% thanks to the company's shift to a professional services strategy. This encouraging gross margin expansion trumped its underwhelming full-year revenue guidance, which was below expectations. A reason for the lower revenue guidance was the loss of a large customer during the quarter, but the market didn't seem to care. Overall, it was a decent quarter for Yext.
Yext is down 11% since the beginning of the year, and at $5.17 per share it is trading 62.1% below its 52-week high of $13.65 from June 2023. Investors who bought $1,000 worth of Yext's shares 5 years ago would now be looking at an investment worth $280.37.
