Key Stats for Freshworks Stock
- Price Change: -16.38%
- Current Price: ~$7
- TIKR Model Target: $18
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What Happened?
Freshworks Inc. (FRSH) crashed 16.38% to close near $7.30 on Wednesday, suffering a brutal selloff after the company’s fourth-quarter earnings report failed to impress a jittery software market.
Despite achieving full-year profitability for the first time in company history and beating Q4 revenue estimates (reporting $222.74 million versus the $218.76 million expected), investors focused entirely on the disappointing forecast for 2026.
Management guided for 2026 revenue growth of approximately 13.5% to 14.5%, a figure that failed to satisfy the market’s high expectations for AI-driven expansion.
This resulted in a classic “Guidance Reset” and triggered a wave of analyst downgrades.
Major institutions, including Citizens and Wells Fargo, slashed their price targets significantly, dropping them from the mid-$20s down to the $16 range.
The underlying fear driving the selloff is that Freshworks, which built its business on providing uncomplicated, affordable software for the mid-market, is losing ground to bigger, AI-native competitors.
In the current brutal environment for software stocks, companies that aren’t demonstrating explosive, hyper-scaling AI revenue are being heavily punished by investors.
See analysts’ growth forecasts and price targets for Freshworks stock (It’s free!) >>>
Is Freshworks Undervalued Today?
During the earnings call, CEO Dennis Woodside attempted to assuage fears by pointing to the company’s success in the Employee Experience (EX) and IT Service Management (ITSM) markets.
He stated: “We crossed the $0.5 billion milestone as of the end of 2025… That represents 26% year-over-year growth… We are witnessing a generational shift where midsized and larger enterprise organizations expect sophisticated software that can handle their complex needs and get fast time to value.”
Woodside also highlighted their AI traction, noting that their Freddy AI product is a “tangible revenue engine” that ended 2025 with over $25 million in ARR.
CFO Tyler Sloat defended the guidance, emphasizing the company’s conservative approach: “First guide of the year is the toughest for the whole year because you have the least amount of visibility… We wouldn’t have put that out there if we weren’t confident in that.”
Read the full Freshworks Transcript on TIKR to see the 2026 Roadmap >>>
Despite the brutal market reaction, TIKR’s Advanced Valuation Model suggests the selloff presents a massive dislocation from the company’s intrinsic value, assuming they can execute on their mid-market strategy.
- Target Price: $18
- Current Price: ~$7
- Potential Upside: +102.2%
Valuation Deep Dive
The investment case for Freshworks is currently a high-stakes battle between fundamental profitability and AI-driven market sentiment.
With the stock trading at a depressed ~$7, the market is pricing in a worst-case scenario where Freshworks is crowded out by legacy giants like ServiceNow.
However, the $18 target implies that if the company simply maintains its mid-teens growth rate and expanding free cash flow, the stock is deeply undervalued.
- The Profitability Pivot: Freshworks generated $223 million in free cash flow in 2025 and expects $250 million in 2026. The market is currently ignoring this cash generation in favor of focusing on top-line deceleration.
- The EX Engine: The Employee Experience segment is growing at over 20%, fueled by the integration of Device42 and the recent acquisition of FireHydrant. If Freshworks can successfully position itself as the unified platform for the mid-market, it can continue to take share from expensive, complex legacy providers.
- The Value Gap: The $17.66 target reflects a scenario where the market eventually rewards Freshworks for its Rule of 40 performance (25% FCF margin + 14% revenue growth), rather than punishing it for not being an AI hype stock.
If Freshworks can prove that its 2026 guidance is indeed conservative and that Freddy AI can re-accelerate growth, the path back to $17.66 offers extraordinary upside for contrarian investors.
Conclusion: A profitable baby thrown out with the bathwater. With over 102% upside potential to the TIKR target of $17.66, Freshworks presents a highly compelling, albeit contrarian, opportunity for investors willing to bet on fundamental cash flow over AI hype.
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How Much Upside Does Freshworks Stock Have From Here?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
