Why Appian Inventory Is Climbing Immediately


What happened

Growth-dependent tech stocks got off to a rocky start this week, but they regained some lost ground in Thursday’s trading. among them, Appian (NASDAQ:APPN) was up about 6.3% as of 1:00 p.m. ET, while the tech-heavy Nasdaq Composite Index was up about 1.5%.

There was no company-specific news driving the low-code software specialist’s share price higher. It appears that the stock is simply benefiting as the market recovers somewhat from its recent sell-off. A new unemployment update from the Labor Department could also feed into the rally.

Image source: Getty Images.

so what

Growth-sensitive technology stocks fell earlier this week as investors continued to react to rising government bond yields, the Fed’s plans to raise interest rates this year and other macroeconomic factors. But on Thursday, the Labor Department released its report on jobless claims for the week ended Jan. 15, which showed 286,000 new jobless claims were filed during the period. The average forecast for the week among economists polled by Dow Jones was just 225,000 new applications.

With this unexpected jump, new jobless claims hit a three-month high. However, this can be a case where bad news is good news for the market, at least as far as the near-term trading environment for stocks is concerned. It’s possible that investors believe that the worse-than-expected jobless numbers could prompt the Fed to take a more dovish approach to raising interest rates and trimming its other stimulus programs.

What now

Appian stock is down about 13.4% so far in 2022, while the Nasdaq Composite Index is down about 6.7%. The software company now has a market cap of about $4 billion and is valued at about 9.5 times this year’s expected sales. That valuation sets the stock up for volatile trading amid faltering appetite for software companies that aren’t posting meaningful earnings.

Appian reported a non-GAAP (adjusted) operating loss of $15.9 million on revenue of $92.4 million for the third quarter. Sales were up 20% year over year and cloud subscription revenue was up 36%, but the results came with a bigger-than-expected loss and management’s forecasts weren’t exactly great.

Investors don’t have to wait long to get a fresh look at business performance. Appian is expected to release its fourth quarter and full year results after the close of trading on February 17. The latest guidance calls for revenue growth of 32.5% and an adjusted loss of $0.225 per share at the midpoint. I own Appian stock and continue to like its long-term opportunities, but investors should proceed with an understanding that stocks may be subject to greater volatility.

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