Akamai (AKAM) Stock Drop: Weaker Quarter, Tepid Outlook
Why the Decline?
Shares of web content delivery and security firm Akamai (NASDAQ: AKAM) plummeted 20.3% following a disappointing Q4 2024 earnings report.
* Revenue growth slowed sharply to 3%, with strong performance in security and compute solutions offset by an 18% decline in delivery revenue.
* Forward-looking guidance signaled a significant slowdown in demand, falling short of Wall Street projections.
Financial Performance
Despite revenue challenges, Akamai exceeded estimates for adjusted operating profit and earnings. EBITDA guidance for Q1 2025 also topped forecasts.
However, the full-year outlook is less promising, with revenue growth projections revised down to 2.7% (from 4.8% in 2024).
Market Impact
Akamai's stock has historically exhibited low volatility, but Q4 earnings triggered a sharp decline. The previous significant drop (13.7%) occurred after Q3 2024 earnings, when revenue guidance fell below expectations.
Long-Term Performance
Since the start of 2024, Akamai's share price has fallen 18.1%. It now trades 30.7% below its 52-week high. Shareholders who invested $1,000 five years ago would have seen their investment diminish to $777.31.
Investment Potential
While the latest decline highlights revenue challenges, it may present an opportunity for investors seeking high-quality stocks at discounted prices.
Disclaimer: This analysis is for informational purposes only and does not constitute investment advice.