Why Nebius Group Stock Plunged (Again) Today
Key Points
Nebius Group reported results that exceeded expectations but lowered its full-year forecast.
Several Wall Street analysts reduced their price targets in the wake of its report.
This is a high-risk, high-reward opportunity, but the price is increasingly attractive.
Nebius Group (NASDAQ:NBIS) stock turned sharply for the second consecutive day, plunging as much as 15.3%. As of 11:24 a.m. ET, the stock was still down 11.2%.
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The catalyst that sent the neocloud operator lower was Wall Street's reaction to the company's latest financial report.
Image source: The Motley Fool.
Delay of game
Nebius reported its third-quarter results on Thursday, and investors weren't pleased. The company grew revenue 571% year over year to $981 million and slashed its adjusted net loss to $38 million from $120 million in the prior-year quarter.
Unfortunately, the company also reduced its Q4 guidance to the lower end of its forecasted range due to delays in bringing additional data center capacity online and announced plans to increase its capital expenditures. The combination sent investors running for the exits, sending the stock down 16% yesterday.
In the wake of Nebius Group's disappointing performance, Wall Street weighed in, with at least seven analysts lowering their price targets on the stock.
One example comes courtesy of DA Davidson analyst Gil Luria, who retained his neutral rating but cut his price target to $125 from $250. That represents potential upside for investors of 10% over the coming year. The analyst cited the delays and the resulting impact on annualized recurring revenue, as management guided for $7 billion by February 2027, down from its previous forecast of $7 billion to $9 billion by the close of 2026.
It's worth noting that the delays in data center capacity were at third-party partner sites, which is beyond Nebius's control.
Nebius isn't yet profitable, but expects to reach break-even on a pretax basis by the end of 2027.
After its recent two-day plunge, Nebius Group stock is increasingly attractive, as just 3 times sales. This is a volatile stock and a high-risk, high-reward opportunity, but looks increasingly attractive.
Danny Vena, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.