What Happened?

Shares of cloud communications provider Bandwidth (NASDAQ: BAND) jumped 3.8% in the morning session after the company announced a partnership with Out There Media to launch next-generation Rich Communication Services (RCS) messaging for businesses in the U.S. market. 

The announcement occurred at Bandwidth's Reverb25 product keynote. This strategic collaboration combined the company's software-driven Communications Cloud with Out There Media's proven Mobucks™ platform. The partnership aimed to power advanced, mobile-first brand engagement on a broad scale. RCS is viewed as a significant upgrade to traditional SMS, providing richer and more interactive mobile experiences. Underscoring the opportunity, an analyst from market intelligence firm IDC stated that RCS was "exponentially more effective than SMS" and was "poised to become the fastest-growing enterprise communications channel in North America." Investors reacted positively to the news, which positioned Bandwidth to capture a key area of growth in enterprise communications.

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What Is The Market Telling Us

Bandwidth’s shares are very volatile and have had 20 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 previous big move we wrote about was 7 days ago when the stock dropped 2.9% on the news that markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading. Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% last month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.

Bandwidth is up 8.4% since the beginning of the year, but at $18.11 per share, it is still trading 17.1% below its 52-week high of $21.84 from November 2024. Investors who bought $1,000 worth of Bandwidth’s shares 5 years ago would now be looking at an investment worth $120.69.

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