Why Navan Stock Is Plummeting Today
Key Points
Navan beat sales and earnings expectations for fiscal Q2.
The company also raised its guidance for full-year sales and adjusted operating income.
Navan announced that it had made a new acquisition, but investors may have questions about the deal.
- 10 stocks we like better than Navan ›
Navan (NASDAQ: NAVN) stock is getting hit hard in Thursday's trading despite a better-than-expected quarterly report. The company's share price was down 22.4% as of 2:40 p.m. ET. The S&P 500 was down 0.6%, and the Nasdaq Composite was down 0.7%.
Stocks are selling off today as investors reposition in response to macroeconomic risk factors and some concerns about valuations for artificial intelligence (AI) companies. The market also doesn't seem to be satisfied with Navan's latest business updates. The company's sales and earnings results for the second quarter of its 2027 fiscal year, which ended July 31, beat expectations -- but stock is still sinking today.
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Navan's fiscal Q2 results looked solid
Navan reported non-GAAP (adjusted) earnings per share of $0.05 on revenue of $233 million in fiscal Q2, with adjusted earnings beating the average analyst target by $0.01 and sales beating the average analyst target by roughly $12.5 million. Sales increased 35.5% year over year in the quarter, and the business swung into adjusted profitability after having recorded a loss of $0.17 per share in the prior-year quarter.
In its fiscal Q2 report, Navan also guided for full-year sales between $927 million and $933 million -- topping the average analyst estimate of roughly $911.3 million. Previously, the company had guided for sales between $907 million and $913 million. The company also raised its adjusted operating income target to between $82 million and $86 million -- up from its earlier target range for operating income between $76 million and $80 million.
Investors may not be thrilled with Navan's latest acquisition
In conjunction with its fiscal Q2 report, Navan announced that it had acquired BoomPop -- a business travel and expense platform built around artificial intelligence (AI) software. While the integration has the potential to strengthen Navan's overall operations, details surrounding the acquisition were scarce. The press release announcing the deal suggests that the acquisition won't have a meaningful impact on the company's guidance, but investors may be worried about the cost and integration challenges that could divert focus away from Navan's core growth engines.
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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.
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