May 21, 2022


Inspired by Technology

Why Avid Technology Stock Crashed Today

3 min read

Table of Contents

What occurred

Shares of Avid Technological innovation (NASDAQ: AVID) were buying and selling down by 20.6% at 2:36 p.m. ET on Thursday following the enterprise delivered very first-quarter benefits that have been at the decreased conclude of management’s past guidance. At that level in the session, the Nasdaq was down by 5.4%, mainly on macro-economic concerns.

So what

Over-all, Avid Know-how continues to see increasing demand from customers for its software package and equipment employed for content material development in the music, film, and Television broadcasting industries. In Q1, its revenue grew 7% year more than 12 months to $100.6 million, which was in line with analysts’ estimates. That was driven by solid advancement in membership revenue of 32% calendar year over year.

Having said that, shortages of important elements for its audio solutions contributed to income staying lighter than administration experienced anticipated.

“Although we proceed to see robust shopper demand and business enterprise action for our options, we have observed a tightening of provide for numerous factors for our audio integrated options at the conclude of the initially quarter that impacted our capability to meet purchaser orders, resulting in initially quarter earnings at the reduced close of our steerage,” CEO Jeff Rosica reported.

He further more cautioned that provide chain hurdles could trigger further more unevenness in the firm’s around-term success.

A software developer working on a computer.

Graphic supply: Getty Visuals.

Now what

The sector is bracing for a feasible recession, offered the mix of superior inflation and the strategies that central banking institutions are employing to counter it. As a outcome, the share price ranges of providers that are reporting weaker development this earnings season are obtaining slammed.

Management expects Avid Technology’s second-quarter income to land in the $92 million to $104 million variety. Entire-12 months advice calls for revenue in the $430 million to $450 million range, which would symbolize development of 7% at the midpoint.

In the meantime, the enterprise carries on to repurchase shares — 10 million value in Q1 — reflecting management’s self-confidence in foreseeable future growth. Analysts at this time anticipate Avid Technology to expand earnings at an annualized charge of 15% above the following 5 a long time.

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John Ballard has no placement in any of the stocks described. The Motley Idiot has no position in any of the shares mentioned. The Motley Fool has a disclosure coverage.

The views and viewpoints expressed herein are the sights and viewpoints of the writer and do not necessarily mirror those of Nasdaq, Inc.

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