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Why PagerDuty, Domo, and Slack Technologies Slumped Today

Dan Caplinger, The Motley Fool

The stock market closed the week on a quiet note on Friday, as most major benchmarks finished with modest gains. The big piece of news today was the U.S. employment report, which showed that the domestic economy didn't create as many new jobs as some had hoped. Nevertheless, the silver lining was that it gave market participants some reassurance that they'd likely get support from the Fed on future decisions regarding interest rates. Some stocks held back the broader indexes with bad news. PagerDuty (NYSE: PD), Domo (NASDAQ: DOMO), and Slack Technologies (NYSE: WORK) were among the worst performers. Here's why they did so poorly.

PagerDuty misses the call

Shares of PagerDuty dropped 11% following the digital operations management specialist's release of its second-quarter financial report. The company's fundamental performance looked relatively solid, including a 45% increase in revenue compared to year-ago levels and customer counts rising above the 12,000 mark. Yet net losses widened from year-ago levels on an adjusted basis, and even though PagerDuty boosted its guidance for the full year, investors seemed to want even more from the high-growth stock. Work on collaborations with key partners could be instrumental in generating the revenue growth that shareholders really want to see.

Desk with person behind it and PagerDuty logo on front.

Image source: PagerDuty.

No arigato for Domo

Domo's stock plunged 37.5% after the digital collaboration company disappointed investors with its second-quarter financial results. Total sales increased only 22% on a 24% rise in subscription revenue, and billings climbed at just a 9% rate year over year. Net losses widened from year-ago levels, and Domo wasn't able to satisfy shareholders with its guidance for the 2020 fiscal year, either. The company has struggled to communicate its message clearly to investors, and its business performance hasn't been strong enough to give them the confidence they want. Until Domo delivers more clarity, it could be tough for the stock to recover.

Slack slips up

Finally, shares of Slack Technologies fell another 9%, adding to losses from Thursday. Investors yesterday were worried about slowing growth in Slack's most recent financial report, finding that even the 58% jump in revenue from year-ago levels wasn't enough to resolve everyone's concerns. Net retention rates of 136% indicated continued new adoption from current Slack customers. However, the company said it believes revenue growth could slow to below 50% in the third quarter, and even expectations for full-year sales gains above 50% made some people worried that the workplace collaboration specialist doesn't have the staying power it'll need to justify current valuations. Those concerns continued into a second day, sending share prices downward even with the long-term potential that Slack has.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends PagerDuty, Inc. and Slack Technologies. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com