Why Freshworks Stock Plummeted This Week
Key Points
Freshworks posted Q4 earnings this week and beat the average Wall Street sales and earnings targets.
Freshworks' forward guidance wasn't strong enough to prevent investors from selling the stock.
The broader market saw a valuation contraction this week, and many software stocks suffered outsized pullbacks.
- 10 stocks we like better than Freshworks ›
Freshworks (NASDAQ: FRSH) stock suffered big sell-offs over the past week's trading in response to the company's latest earnings report. The software specialist's share price fell 18.8% over the stretch.
Freshworks published its fourth-quarter results after the market closed on Feb. 10 and actually reported sales and earnings for the period that beat Wall Street's expectations. Despite the performance beats, investors weren't satisfied with the company's forward guidance and sold out of the stock.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
Freshworks sank amid another tough week for software stocks
In last year's fourth quarter, Freshworks achieved non-GAAP (adjusted) earnings per share of $0.14 on sales of $222.7 million. Adjusted earnings per share came in $0.03 ahead of the average Wall Street target, and sales topped the average analyst estimate by roughly $3.9 million.
Even with better-than-expected Q4 performance, the stock lost ground amid bearish momentum for the broader market. The S&P 500 fell 1.4% over the last week of trading, and the Nasdaq Composite fell 2.1%. Many software stocks were hit particularly hard in last week's market pullback, continuing a trend that has seen investors broadly become more cautious about the industry.
What's next for Freshworks?
Freshworks is guiding for sales in the first quarter to be between $222 million and $225 million. Meanwhile, full-year sales are projected to be between $952 million and $960 million. With the company targeting annual revenue growth of roughly 14% this year, management's guidance wasn't bad -- but investors have become more selective when it comes to software stocks.
The software industry has seen big valuation pullbacks recently in response to concerns about growth-dependent valuation multiples and the potential for AI-driven disruption. While this trend could create some worthwhile buying opportunities, volatility could continue in the near term.
Should you buy stock in Freshworks right now?
Before you buy stock in Freshworks, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Freshworks wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $414,554!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,120,663!*
Now, it’s worth noting Stock Advisor’s total average return is 884% — a market-crushing outperformance compared to 193% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of February 15, 2026.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Recommended Articles
