What Happened?
Shares of construction management software maker Procore (NYSE: PCOR) fell 3.1% in the afternoon session after Confluent's disappointing quarterly results signaled growing headwinds in the space.
The data-streaming company missed revenue forecasts, citing significant challenges including customers optimizing their cloud spending and a slowdown in new projects. The situation was worsened by news that a large AI-native client is shifting to self-management, which is expected to impact future growth. Consequently, Stifel downgraded Confluent's stock from "Buy" to "Hold." The negative sentiment appeared to spill over to peers like cloud monitoring firm Datadog, which also saw its shares decline.
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What Is The Market Telling Us
Procore’s shares are quite volatile and have had 15 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 12 months ago when the stock dropped 26.4% on the news that the company reported second-quarter earnings results. Its revenue guidance for the next quarter missed, and its customer growth decelerated. We do note the company slightly lifted its full-year revenue outlook, but the market seems to be more focused on the short term. Overall, this was a mediocre quarter for Procore Technologies. Following the results, Wall Street analysts downgraded the stock's rating. DA Davidson downgraded the stock from Buy to Neutral, adding that " the company's Q2 print signaled significant company-wide operating model changes to come.".
Procore is down 3.3% since the beginning of the year, and at $72.67 per share, it is trading 17.7% below its 52-week high of $88.33 from February 2025. Investors who bought $1,000 worth of Procore’s shares at the IPO in May 2021 would now be looking at an investment worth $825.74.
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