Why Rubrik Stock Plummeted Today

Key Points

• Rubrik stock plummeted today despite better-than-expected sales and earnings in Q2.

• Investors didn't think the company's forward guidance was strong enough to back up the stock's valuation.

• 10 stocks we like better than Rubrik ›

Rubrik (NYSE: RBRK) stock suffered a big valuation pullback in Wednesday's trading. The company's share price sank 18.1% the day of trading following the release of its second-quarter report.

Rubrik published its Q2 results after the market closed yesterday and posted mixed performance. The data-security specialist posted sales and earnings that were much better than expected, but investors seem to have concerns about its valuation and forward guidance.

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Rubrik stock fell despite strong Q2 beats

Rubrik recorded a non-GAAP (adjusted) loss of $0.03 per share on sales of $309.86 million last quarter. The bottom-line performance beat the average Wall Street analyst estimate by $0.31 per share, and sales topped the consensus estimate by $27.6 million. Revenue was up 51.2% year over year in the period, and margins came in significantly above expectations. Despite the big beats, investors didn't think the company's forward guidance was good enough.

What's next for Rubrik?

Rubrik is guiding for sales to be between $319 million and $321 million in the third quarter and expects an adjusted loss of between $0.16 and $0.18 in the period. Meanwhile, the company is guiding for an adjusted loss of between $0.44 and $0.50 on revenue between $1.227 billion and $1.237 billion for the full year.

The guidance points to strong sales growth and narrowing losses, but investors apparently didn't think management's targets were strong enough to support the data specialist's valuation. Even after today's big pullback, Rubrik is still valued at approximately 12.8 times this year's expected sales.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Rubrik. The Motley Fool has a disclosure policy.