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Oracle Shares Skid in Biggest One-Day Slump This Year

·2 min read

(Bloomberg) -- Oracle Corp. shares had their worst day this year, snapping two weeks of gains, after a Berenberg analyst initiated coverage on the software company with a hold rating.

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The Austin, Texas-based database giant declined 5.2% to $72.12 at the close Wednesday in New York, its biggest one-day fall since December. The selloff today comes after its stock dropped on Tuesday amid a rout in tech stocks as worse-than-expected inflation sparked a meltdown in the broad market.

Earlier this week Oracle reported fiscal first-quarter sales that jumped 18% from a year ago, buoyed by its transition to cloud computing and the acquisition of health records provider Cerner. Revenue was $11.4 billion, meeting analysts’ average estimate, while noting that currency fluctuations reduced its earnings by 8 cents a share to $1.03.

Berenberg analyst Nay Soe Naing initiated coverage on the stock with a hold rating, noting that while Oracle isn’t losing business to competitors, customers deciding to transition to cloud computing could complicate and extend the process for the software maker. More than half the 33 analysts covering Oracle have a hold rating on the stock, while 12 recommend buying its shares and four suggest selling.

“A third of Oracle’s revenue came from cloud services; that’s a crowded space, and one that is only getting more and more crowded,” said Michael Matousek, head trader at U.S. Global Investors.

Matousek said the earnings may have “brought in a lot of high-frequency people or other players, that could have provided the liquidity for bigger holders to unload shares. It created an opportunity to sell, and it looks like that’s the case on the tape today.”

(Updates with closing shares in the second paragraph)

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