Why Shares of HubSpot Fell 24.1% in September

High-flying software stocks sold off last month in a nasty market rotation.

| More on:

What happened

Shares of small and medium business marketing software company HubSpot (NYSE: HUBS) plunged 24.1% in September, according to data from S&P Global Market Intelligence. The plunge marked a big reversal from the stock’s impressive 11.7% gain in August after its positive second-quarter earnings report. What caused such a sell-off?

So what

There was actually no material bad news to come out of the company in September. The sell-off can most likely be attributed to a big rotation out of expensive growth stocks and more into lower-priced value stocks on the part of large institutions. The rotation affected not only HubSpot, but also a variety of software stocks that are posting high revenue growth but little in the way of profits.

Interestingly, the sectorwide sell-off occurred just after the company’s Inbound event, in which HubSpot announced a slew of innovations that actually prompted a big analyst upgrade thereafter. But these positive news items couldn’t stop the larger technical forces of big institutions selling growth software stocks en masse.

Now what

HubSpot stock has fallen all the way to around $158 per share today, down from its high of $207.98 in August. While the company isn’t cheap by any means, with little in the way of earnings and a price-to-sales ratio still over 11, it’s far cheaper than it was just a couple of months ago. Analysts are also fairly bullish on the company, with all of them giving higher price targets than the current share price, in a range of $165 to $231. Since the stock is 50 points cheaper on no material company news, investors may wish to give this software leader a look.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends HubSpot. The Motley Fool has a disclosure policy.

More on Tech Stocks

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

Woman has an idea
Tech Stocks

Prediction: 1 Stock That Could Trounce the Market 

The TSX has been favouring tech stocks, but not this one. However, it has the potential to trounce the market…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Businessman holding AI cloud
Tech Stocks

AI Will Transform Everything: Investors, Be Early Adopters and Buy These 3 Stocks

Investors looking to invest in companies doing big things in AI should consider these three stocks for their portfolios.

Read more »

stock research, analyze data
Tech Stocks

Forget Shopify: These Unstoppable Stocks Are Better Buys Today 

Should you consider buying Shopify stock while rivals consider a buyout or should you go for stocks with a stronger…

Read more »

A colourful firework display
Tech Stocks

2 Potentially Explosive Stocks to Buy in March

These two growth stocks are destined for many more years of market-crushing returns.

Read more »

edit CRA taxes
Tech Stocks

TFSA Millionaires Are Learning They Can Still Be Taxed

If you day trade stocks like Shopify (TSX:SHOP) in a TFSA, you may be taxed.

Read more »