What Happened?
Shares of cloud communications provider RingCentral (NYSE: RNG) fell 3.8% in the afternoon session after Mizuho Securities downgraded the stock to 'Neutral' from 'Outperform', citing potential downside risks to the company's 2025 subscription revenue growth estimates.
The firm's more cautious stance highlighted worries about the cloud-based communications provider's ability to hit its future sales goals. This tempered outlook suggested that growth in the upcoming year might not be as strong as previously anticipated, leading investors to react to the potential for slower performance.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy RingCentral? Access our full analysis report here, it’s free.
What Is The Market Telling Us
RingCentral’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 13 days ago when the stock dropped 3.8% after 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.
RingCentral is down 11.9% since the beginning of the year, and at $30.68 per share, it is trading 26.6% below its 52-week high of $41.82 from December 2024. Investors who bought $1,000 worth of RingCentral’s shares 5 years ago would now be looking at an investment worth $117.37.
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