What Happened?
Shares of communications platform-as-a-service company Bandwidth (NASDAQ: BAND) jumped 9.5% in the afternoon session after the company reported mixed first quarter 2025 results which beat analysts' revenue and earnings expectations and included a lift in full-year revenue guidance. Sales grew 2% over the same time last year, thanks to demand for voice and messaging tools and big wins with hospitals and government groups.
On the other hand, its EBITDA missed. Still, this print had some key positives.
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What The Market Is Telling Us
Bandwidth’s shares are very volatile and have had 27 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 biggest move we wrote about over the last year was 11 months ago when the stock dropped 15.5% on the news that Morgan Stanley analyst Meta Marshall downgraded the stock’s rating from Equal-weight (Hold) to Underweight (Sell) and lowered the price target from $18 to $15.
The analyst cited some of the reasons for the downgrade, noting, "BAND's exposure to domestic election cycles has typically resulted in decelerating growth the following year." Marshall added, “We still expect headline revenue upside in '24 on the election cycle, but the majority of growth attributable to pass-through surcharges is captured in 25%+ YTD run in shares.” Marshall is largely negative on communications software as a whole and expressed this through additional downgrades of TWLO and EGHT.
Bandwidth is down 19.8% since the beginning of the year, and at $13.40 per share, it is trading 41.3% below its 52-week high of $22.82 from July 2024. Investors who bought $1,000 worth of Bandwidth’s shares 5 years ago would now be looking at an investment worth $125.18.
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