Why RingCentral (RNG) Stock Is Nosediving
What Happened:
Shares of office and call centre communications software provider RingCentral (NYSE:RNG) fell 6.1% in the morning session after the company announced that Tarek Robbiati, previously serving as CEO, has mutually agreed to separate from the company and resign from the Board of Directors, effective December 8, 2023. The resignation is stated to be amicable and not due to any disagreement with the company or the board. RingCentral's founder, Vlad Shmunis, has resumed the role of Chief Executive Officer full-time while continuing to serve as Chairman of the Board.
The sudden exit of a CEO is never a good sign. This development introduces additional uncertainty about the company's direction, potentially raising concerns among investors. Notably, on Thursday, December 7, 2023, RingCentral's Chief Financial Officer, Sonalee Parekh, was scheduled to present at a conference but had to cancel due to illness.
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 over the last year have had 33 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago, when the stock gained 11.1% on the news that the company reported an encouraging "beat and raise" quarter. First-quarter revenue, adjusted EBITDA, free cash flow, and earnings per share (EPS) all beat Consensus estimates. Revenue guidance for the next quarter and the full year came in roughly inline with Consensus. On a more positive note, EPS guidance for the next quarter exceeded expectations, and the company raised the full-year EPS guidance. Overall, it was a solid quarter for the company especially considering the mixed results of peers and macro uncertainty.
RingCentral is down 7.4% since the beginning of the year, and at $32.07 per share it is trading 33.8% below its 52-week high of $48.41 from February 2023. Investors who bought $1,000 worth of RingCentral's shares 5 years ago would now be looking at an investment worth $375.67.
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