What Happened?
Shares of cloud communications provider Bandwidth (NASDAQ: BAND) jumped 14.3% in the afternoon session after the company reported fourth-quarter results that beat Wall Street's profit estimates and provided a strong forecast for the upcoming quarter and full year.
For the fourth quarter of 2025, Bandwidth posted adjusted earnings of $0.35 per share and adjusted EBITDA of $24.8 million, surpassing analyst expectations. While revenue of $207.7 million was roughly in line with forecasts, it marked a slight 1.1% year-over-year decline. The company's outlook particularly pleased investors. Management guided for first-quarter 2026 revenue of about $201.5 million, which was well ahead of consensus estimates. Furthermore, the full-year 2026 adjusted EBITDA forecast of $120 million also beat expectations, implying growth of nearly 29% from the previous year. This strong profitability outlook appeared to outweigh the company’s weaker-than-expected full-year adjusted earnings per share guidance.
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What Is The Market Telling Us
Bandwidth’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for Bandwidth and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 16 days ago when the stock dropped 6.1% on the news that fears of disruption from artificial intelligence spooked investors, leading to a broad-based sell-off. The market witnessed a "basket-style reaction," a term for when investors reduce exposure to an entire segment without differentiating between individual company business models. The negative sentiment was widespread, pulling down all of the Magnificent Seven stocks and sending the S&P 500 Information Technology Sector down nearly 3%.
Bandwidth is up 4.4% since the beginning of the year, but at $14.84 per share, it is still trading 18.9% below its 52-week high of $18.29 from September 2025. Investors who bought $1,000 worth of Bandwidth’s shares 5 years ago would now be looking at an investment worth $78.59.
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