What Happened?

Shares of data infrastructure software company, Confluent (NASDAQ:CFLT) fell 18% in the afternoon session after the company reported weak first quarter 2025 results: its full-year revenue guidance missed significantly and its revenue guidance for next quarter fell short of Wall Street's estimates. 

On the other hand, Confluent reported optimistic EPS guidance for the next quarter, which blew past analysts' expectations. In addition, its full-year EPS guidance exceeded Wall Street's estimates. Zooming out, we think this was a decent quarter featuring some areas of strength but also some blemishes. The areas below expectations seem to be driving the move.

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What The Market Is Telling Us

Confluent’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. But moves this big are rare even for Confluent and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 7% on the news that stocks extended their rebound, led by strong gains in the technology sector, as renewed optimism surrounding U.S.–China trade negotiations lifted investor sentiment. 

Contributing to the bullish tone was a standout earnings report from enterprise software leader ServiceNow, which topped Wall Street's expectations on RPO, profit and earnings. More importantly, the company's remaining performance obligations (RPO), a key forward-looking metric for future revenue, gave investors confidence that enterprise customers were not pulling back spending amidst uncertain macro. 

This optimism was further reinforced by solid results from Texas Instruments and Lam Research. Their performance was especially encouraging for semiconductor stocks, which had been under pressure due to their exposure to global trade tensions. These earnings results suggested that, despite macroeconomic uncertainties, demand in key tech verticals remained resilient.

Confluent is down 31.6% since the beginning of the year, and at $19.34 per share, it is trading 48.6% below its 52-week high of $37.65 from February 2025. Investors who bought $1,000 worth of Confluent’s shares at the IPO in June 2021 would now be looking at an investment worth $429.48.

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