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Why Elastic Stock Jumped 32.4% in July

Keith Noonan, The Motley Fool

What happened

Shares of Elastic (NYSE: ESTC) gained 32.4% in July, according to data from S&P Global Market Intelligence. The cloud-software company's stock benefited from movement for the broader market and appears to have seen significant gains after being featured on a segment of CNBC's Mad Money.

ESTC Chart

ESTC data by YCharts.

The show's host, Jim Cramer, discussed Elastic stock on July 10. The software-as-a-service search company also rolled out new products and updates in the month, but it looks like the Mad Money feature may have been the biggest catalyst.

A cloud icon in front of graphs, charts, and people using laptops and tablets.

Image source: Getty Images.

So what

Cramer outlined Elastic's business and discussed how apps like Tinder and Uber rely on its search technologies to connect users and power their algorithms, and how the stock could have upside after not fully recovering from an uninspiring fourth-quarter earnings report in June.

Being featured on Mad Money corresponded with a significant rally for the stock. But Cramer also stated he expects to see some pullback for some of the more growth-dependent cloud-software companies and cautioned investors because the stock trades at a relatively high P/E compared with other companies in the category that are growing faster, like Twilio.

Now what

Elastic stock has lost some ground in August, trading down nearly 10% in the month so far.

ESTC Chart

ESTC data by YCharts.

The company is guiding for first-quarter revenue between $82 million and $84 million and expects to post a non-GAAP (adjusted) loss per share between $0.42 and $0.44. For the full year, Elastic is guiding for an adjusted loss per share between $1.33 and $1.49.

It currently has a market capitalization of roughly $6.75 billion and is valued at about 17 times this year's expected sales.


Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Elastic N V. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com