Splunk Stock Is a Mega Bet on Big Data

SPLK is delivering business analytics software via blockchain technology

The story of Splunk (NASDAQ:SPLK) stock has been up and down in 2019. For the most part, the trend is up. But in the last month-and-a-half, SPLK stock has been trending down.

Splunk stock is a compelling bet on big data and the blockchain
Source: Michael Vi / Shutterstock.com

Even after a stellar earnings report, investors were concerned about the company’s shift from a perpetual license sales model to a renewable sales model. This shift resulted in negative cash flow from operations of $129 million.

But when I look at what SPLK is doing to ensure data integrity, specifically as it relates to blockchain technology, I know they’re investing in what promises to be the future of data storage.

Big Data Is the Latest Megatrend of the Digital Age

In the 1980s, the book Megatrends coined a word that continues to define the technologies and trends that transform our lives. One of the megatrends today is big data. In the early 1980s, few people could imagine how the digital revolution would change our lives. Having the ability to do all of our Christmas shopping from a computer was a foreign concept. Having that computer in the palm of our hand was like something from The Jetsons.

But those predictions have come true and then some. My local library has become not much more than a Starbucks without a barista. The only patrons I see are using computer workstations to check the internet. It didn’t take long for libraries to adapt to a new reality. All the information found in the encyclopedias and reference materials on their shelves were now available to patrons with just a few keystrokes.

But as society has begun to collect volumes of information on our mobile devices, we need a place to store that information, and a place to analyze that data. This is the idea of big data. It’s the idea that technology can replace all the available knowledge if it resides in a single “place” and if algorithms are written to analyze the data. That place started as huge server farms and is rapidly moving onto the cloud.

Splunk is one of many companies in the “cloud computing” space. Splunk estimates that by 2020, data production will be 44 times greater than in 2009. And that there will be three times the number of connected devices by 2021. But Splunk is taking a bold approach that involves making investments in the future of cloud computing. And that’s why I’m so excited about Splunk stock.

The Future of Splunk Stock Is Found in the Blockchain

For all the benefits of big data, there is one overriding concern: how secure is the data? In recent years, data breaches have affected consumer data at institutions we once thought were impenetrable.

We traded our personal information for access to information. And we’ve found the hard way that no matter how many times we change our password or correctly identify the pictures that have traffic signs for Captcha, our information is not really secure. And as corporations are looking at their business models, they are ranking security from data tampering as their most relevant threat.

But if a company is already working with a third party to house their data, they can find it’s too big to move. And it can also be incredibly expensive to store additional copies. That’s where the blockchain comes in.

Blockchain is changing the narrative surrounding artificial intelligence and its effect on big data. Blockchain uses distributive ledger technology to restore data to its originators. Further, it incorporates that data horizontally and inter-operatively across what technology visionary George Gilder terms the new cryptocosm.

In the blockchain world, security – not information – is the first order of business. Instead of having information in centralized locations, the blockchain promotes decentralization.

Splunk is using blockchain technology to allow customers to securely store their data. And they can do this without sacrificing their ability to analyze it and without moving it.

From Splunk’s own blog:

As Splunk indexes data it stores hashes of the data on an immutable ledger. If any of the indexed data stored in Splunk is corrupted or tampered with, it will no longer match what is on the distributed ledger. Voila, now you can prove your data hasn’t been tampered with — while maintaining the ability to analyze it — without moving it.

What’s Next for SPLK Stock?

Splunk is demonstrating that they understand that corporations place importance on data integrity. Their numbers are showing it. Splunk’s quarterly renewable software bookings came in at 95%. Plus, the company is seeing that number rise to 99% by the fourth quarter.

Splunk is also continuing to project robust software revenue and is increasing the number of new customers being brought on. In fact, Splunk CEO says that the company is well on track to reach its goal of 20,000 total customers by the end of 2020.

Splunk will also be completing its acquisition of SignalFx in late 2020. This will further move the company into the realm of distributive ledger technology. Splunk stock is off its high from earlier this year. And that makes it an excellent long-term buy.

As of this writing, Chris Markoch does not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2019/10/splunk-stock-rides-big-data-and-blockchain/.

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