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NetApp (NTAP) Stock Trades Down, Here Is Why

ⓘ This article is third-party content and does not represent the views of this site. We make no guarantees regarding its accuracy or completeness.

NTAP Cover Image

What Happened?

Shares of data storage company NetApp (NASDAQ: NTAP) fell 1.3% in the afternoon session after its weak revenue forecast for the upcoming quarter overshadowed an otherwise solid earnings report. 

For its third quarter, NetApp posted revenue of $1.71 billion and adjusted earnings per share of $2.05, surpassing Wall Street's expectations. However, investors focused on the company's guidance for the next quarter, which at $1.69 billion, came in 1.1% below consensus estimates. This weaker-than-expected outlook suggested a more challenging environment ahead and appeared to be the primary driver for the stock's decline, outweighing an increase in the company's full-year profit forecast.

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 NetApp? Access our full analysis report here.

What Is The Market Telling Us

NetApp’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 5 days ago when the stock gained 4.7% on the news that comments from a key Federal Reserve official hinted at a potential interest rate cut in December. John Williams, president of the Federal Reserve Bank of New York, signaled he was open to lowering the fed funds rate—the key interest rate that banks charge each other for overnight loans—to support the job market. Speaking at an event, Williams stated that he sees “room for a further adjustment” for interest rates, which immediately shifted market expectations. Following his remarks, the perceived likelihood of an interest rate cut at the Federal Reserve's December meeting flipped from unlikely to more likely than not. The prospect of lower borrowing costs sent a wave of optimism through the markets, leading to a rally in major indices like the S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite.

NetApp is down 5.4% since the beginning of the year, and at $109.68 per share, it is trading 16.3% below its 52-week high of $131.11 from December 2024. Investors who bought $1,000 worth of NetApp’s shares 5 years ago would now be looking at an investment worth $2,059.

Microsoft, Alphabet, Coca-Cola, Monster Beverage—all began as under-the-radar growth stories riding a massive trend. We’ve identified the next one: a profitable AI semiconductor play Wall Street is still overlooking.Go here for access to our full report.

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