Everbridge (EVBG)
Today Everbridge (EVBG) is trading sharply lower following an out-of-the blue announcement that the CEO is leaving. Not only is David Meredith leaving his post as CEO but also as a member of the Board of Directors.
Suffice to say this comes as a surprise to all that follow the stock. Stifel, Baird, Barclays, JP Morgan, Bank of America … all the analysts following the name have done an about face on a stock that was starting to shape up and instead is now facing questions about its growth strategy, leadership and – not insignificantly – position in the competitive field jockeying for market share in the EU.
As if to drive home the “what happens next” point, the press release indicated that 2022 revenue growth will be in the low-20% range versus expectations of closer to 26%.
The punchline is that uncertainty here is now extremely high. Trading volume is more than 5,000% what it would normally be at this point in the day (over 10 million shares traded versus average of 435,000).
We have a quarter of our original position left and the name had been rated buy. So now we have to decide what to do.
To be clear, this is not a buy the dip situation. While something could materialize that could drive EVBG sharply higher, the stock is no longer rated buy and I fully expect we will sell. It’s just a matter of when.
We could take the medicine now and just walk away.
Or we could hold on for a few days or weeks and look for some type of bad-to-better scenario that could help EVBG move materially higher (not 5%, but more like 20%, 30%, etc.).
With roughly $2 billion wiped off the company’s market cap this is clearly an extreme reaction. Even some of the most bearish new price targets are 65% above where the stock is now. Some remain in the 150 to 180 range, as much as 3x higher than EVBG is now.
My thought is that we should give this a few days to see what happens. Maybe we get more clarity on the situation and EVBG bounces. The flip side is maybe that clarity makes things even worse. But at this point the damage is bad enough that holding for a short while seems worth the risk.
Everbridge moves to hold. HOLD