What Happened?
Shares of business intelligence platform Domo (NASDAQ: DOMO) fell 24% in the afternoon session after the company reported mixed third-quarter results, issued weak forward guidance, and announced its CEO was reducing his duties for health reasons.
Although Domo's third-quarter revenue of $79.4 million was flat compared to the previous year and met analyst expectations, investors were discouraged by the company's outlook. Management's revenue guidance for the next quarter came in below estimates. Furthermore, the company significantly lowered its full-year adjusted earnings per share forecast. Adding to investor concerns, Domo announced that CEO Joshua G. James was reducing his duties to focus on his health, with an interim executive appointed. Management attributed the weaker performance to longer and more complex sales cycles with partners, leading to deal slippage. In response to the results, TD Cowen lowered its price target on the stock from $21.00 to $16.00.
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What Is The Market Telling Us
Domo’s shares are extremely volatile and have had 35 moves greater than 5% over the last year. But moves this big are rare even for Domo and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 2.6% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut.
The positive sentiment followed comments from New York Federal Reserve President John Williams, a voting member of the rate-setting Federal Open Market Committee (FOMC), who indicated he sees room for further policy easing. Following his remarks, the probability of a December rate cut surged from 39% to 71%, according to the CME FedWatch Tool, causing Treasury yields to fall. Lower interest rates can be particularly beneficial for growth-oriented sectors like software, as they increase the present value of future earnings. This renewed hope provided a boost to the sector, which had recently faced pressure from concerns over high valuations in artificial intelligence.
Domo is up 22.8% since the beginning of the year, but at $8.71 per share, it is still trading 52.2% below its 52-week high of $18.20 from September 2025. Investors who bought $1,000 worth of Domo’s shares 5 years ago would now be looking at an investment worth $191.78.
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