Key Stats for Elastic Stock
- Price Change for Elastic stock: -15%
- $ESTC Share Price as of Nov. 21: $70
- 52-Week High: $119
- $ESTC Stock Price Target: $113
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What Happened?
Elastic (ESTC) stock plunged nearly 15% on Friday despite delivering a solid earnings beat for its fiscal second quarter.
The data analytics and search company reported adjusted earnings per share of $0.64, beating analyst expectations of $0.58 by six cents. Revenue came in at $423.5 million, topping the consensus estimate of $418 million.
So why the selloff? Investors are concerned about slowing cloud growth momentum. While Elastic stock delivered strong overall results with 16% total revenue growth, cloud revenue growth decelerated from previous quarters.
This slowdown has investors worried about the company’s ability to maintain its growth trajectory in what’s becoming an increasingly competitive AI and data analytics market.
The quarter also saw some complications from a government shutdown in October, which caused several self-managed renewals to slip from Q2 into Q3.
Company management emphasized these were just timing issues, not lost business, but the optics still rattled investors.
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What the Market Is Telling Us About Elastic Stock
The sharp drop in Elastic stock suggests investors are hyper-focused on growth momentum right now, especially in the cloud segment.
Even though the company raised its full-year guidance and showed strength in large deal commitments, the market seems to be punishing any signs of deceleration.
Elastic closed over 30 deals worth more than $1 million in annual contract value during the quarter, including five deals exceeding $10 million in total contract value. Two of those were security wins valued at over $20 million each.
The company is also seeing strong traction in AI use cases, with over 2,450 cloud customers now using Elastic for generative AI applications.
Management raised full-year revenue guidance to $1.715 billion to $1.721 billion, representing 16% growth at the midpoint.
They also boosted their earnings outlook to $2.40 to $2.46 per share for fiscal 2026, up from the previous consensus of $2.35.
For patient investors, today’s drop in Elastic stock might represent an overreaction to short-term growth concerns.
The company’s expanding presence in AI-driven search and security applications, combined with improving profitability margins, suggests the underlying business remains healthy.
However, the market will be watching closely to see if cloud growth can reaccelerate in the coming quarters.
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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!
