Hubspot stock price has been in a freefall in the past few months, making it one of the worst-performing companies in Wall Street. HUBS has dropped from a high of $880 in February last year to the current $200, erasing billions of dollars in value as the market capitalization plunged from $42 billion to the current $9.9 billion.
Hubspot stock has crashed amid the AI headwinds
Hubspot is a top company in the digital marketing industry, where it offers marketing automation, sales software, and a commerce hub. Its goal is to unite marketing, sales, and customer service to over 278,000 customers from around the world. Some of its top customers are companies like eBay, DoorDash, Reddit, and TripAdvisor.
Hubspot’s business has come under pressure in the past few months as investors reacted to the ongoing artificial intelligence growth, which analysts believe may disrupt its business. These concerns have helped to push other companies like ServiceNow, Adobe, and Intuit lower.
Still, there are signs that the company’s business is doing well and that its valuation has become better. The most recent results, which came out on Wednesday, showed that its business continued doing well, with its revenue rising by 20% to over $847 million. Most of this revenue was in its subscription segment, which made over $829 million in revenue.
The company’s operating profit also jumped by 44% to over $191 million as its Free Cash Flow soared to over $209 million.
READ MORE: Google is no longer interested in buying HubSpot
As a result, the company’s annual revenue rose by 19% to over $3.1 billion, while its operating profit soared by 26% to over $582 million.
The management believes that the company’s growth will accelerate this year. Its first quarter revenue is expected to come in between $862 million and $863 million, up by 21% YoY.
Additionally, the company announced that it was starting a share repurchase program worth $1 billion that will last for 24 months. Share repurchases are important for a company as it reduces the number of outstanding shares.
Hubspot has become an undervalued company, with the forward price-to-earnings ratio of 24, much lower than the five-year average of 149. The valuation is in line with the technology sector median of 24%.
The company also has a forward price-to-earnings-to-growth (PEG) ratio of 1.06, also lower than the sector median of 1.52.
Meanwhile, the rule-of-40 metric is also favorable as the company has a forward revenue growth of 21% and an operating margin of 17%, which is about 38%.
Hubspot stock price technical analysis
The weekly timeframe chart shows that the HUBS stock price has crashed from a high of $880 in February last year to the current $209.
It recently dropped below the key support level at $242, its lowest level in October 2022. It has moved below the 50-week and 100-week Exponential Moving Averages (EMA).
The Relative Strength Index (RSI) has dropped to 23, its lowest level in years. Also, the MACD indicator has also continued falling this year, while the Average Directional Index (ADX) has soared to 40.
Therefore, the most likely scenario is where the stock will continue falling and then bounce back later this year. If this happens, it may rebound to the key resistance level at $300.
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