Cloud infrastructure automation platform HashiCorp’s shares experienced a significant 10% surge in the afternoon session following reports that tech giant IBM is nearing a deal to acquire the company for approximately $35 per share. According to sources, an agreement between IBM and HashiCorp could be finalized as early as Wednesday, April 24, 2024. This development corroborates an earlier report from the Wall Street Journal on Tuesday, April 23, 2024, which sparked a 20% rally in HCP’s stock. However, BTIG analyst downgraded HashiCorp from Buy to Neutral, expressing caution due to uncertainties surrounding the deal’s completion and the typical approval and closing process, which could take six to nine months. The market’s reaction to the potential acquisition has been nuanced, with analysts noting HashiCorp’s history of volatile stock movements. Over the past year, the company’s shares have experienced 19 fluctuations exceeding 5%. The most significant move occurred 11 months ago, when the stock dropped 25.6% after the company reported first-quarter results that surpassed analysts’ estimates for revenue, remaining performance obligations (RPO), and earnings per share (EPS). While the company’s cash position improved with operating cash flow reaching near breakeven, weak guidance overshadowed the positive results. Revenue guidance for the next quarter fell short of consensus, and full-year guidance was lowered, raising concerns about company-specific challenges or limited visibility into near-term fundamentals. Non-GAAP operating loss guidance remained relatively aligned with expectations. Management attributed the underwhelming guidance to a weakened macro environment and pressure in the buying process. HashiCorp also announced cost-cutting measures, including an approximately 8% reduction in headcount. Despite a solid quarter overall, investors focused on the disappointing guidance. Since the beginning of the year, HashiCorp’s stock has gained 38.6%, but it still trades 10.7% below its 52-week high of $35.49, set in June 2023. Investors who purchased $1,000 worth of HashiCorp shares at the IPO in December 2021 would currently hold an investment valued at $371.87.
IBM to Acquire HashiCorp for $35 per Share
