What Happened?
A number of stocks jumped in the afternoon session after MongoDB reported impressive earnings.
The data analytics company saw its shares jump nearly 40% after announcing much stronger-than-expected results, including a revenue beat and an optimistic outlook for the upcoming quarter. This performance suggested robust demand for its cloud-based database services, leading investors to believe the broader data storage and SaaS sectors are experiencing similar health. The positive sentiment created a ripple effect, with peers like DigitalOcean and Snowflake also seeing significant gains and outperforming the general market.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Cloud Monitoring company Datadog (NASDAQ: DDOG) jumped 3.7%. Is now the time to buy Datadog? Access our full analysis report here, it’s free.
- Developer Operations company JFrog (NASDAQ: FROG) jumped 5.7%. Is now the time to buy JFrog? Access our full analysis report here, it’s free.
- Project Management Software company Atlassian (NASDAQ: TEAM) jumped 4%. Is now the time to buy Atlassian? Access our full analysis report here, it’s free.
- Communications Platform company Bandwidth (NASDAQ: BAND) jumped 3.6%. Is now the time to buy Bandwidth? Access our full analysis report here, it’s free.
- Data Infrastructure company Confluent (NASDAQ: CFLT) jumped 4.6%. Is now the time to buy Confluent? Access our full analysis report here, it’s free.
Zooming In On JFrog (FROG)
JFrog’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 3.1% after the SaaS sector continued to rally as favorable inflation data bolstered hopes for a Federal Reserve interest rate cut.
This optimism was largely driven by a benign July Consumer Price Index (CPI) report, which solidified investor expectations for a Federal Reserve interest rate cut. Following the release of the inflation data, which showed a year-over-year increase of 2.7%, the probability of a rate cut in September surged to over 96%.
Lower interest rates are typically beneficial for growth-oriented technology stocks, as they can reduce borrowing costs and increase the present value of future earnings. Adding to the positive sentiment was a 90-day delay in the imposition of higher tariffs on Chinese goods, which reduced trade-related uncertainty for the technology sector.
JFrog is up 56.5% since the beginning of the year, and at $48.05 per share, has set a new 52-week high. Investors who bought $1,000 worth of JFrog’s shares at the IPO in September 2020 would now be looking at an investment worth $741.63.
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