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Tue, June 6 at 7:00PM ET

Why Is Five9 (FIVN) Stock Down 20% Today?

  • Five9 (FIVN) stock is getting crushed on the day and is hitting new 52-week lows.
  • The fall comes as CEO Rowan Trollope steps down and Chairman Mike Burkland steps in at CEO.
  • The company also announced its preliminary third-quarter results, which topped revenue and earnings estimates.
FIVN stock - Why Is Five9 (FIVN) Stock Down 20% Today?

Source: rafapress /

It’s a rough day in the markets as the S&P 500, Nasdaq and other top U.S. stock indices continue to tip lower. However, it’s particularly tough for Five9 (NASDAQ:FIVN) investors. Shares of FIVN stock are down 23% so far on Monday and continue to make new lows in the session.

The company reported its preliminary third-quarter results before the opening. Unlike what we saw last week from Advanced Micro Devices (NASDAQ:AMD), Five9 issued strong results.

The company generated revenue of roughly $198 million, topping analysts’ expectations of $193.1 million and management’s prior guidance of $192.5 million to $193.5 million. Earnings came in at roughly 38 cents a share, which also topped estimates and management’s prior guidance.

So, what’s the bad news? And why is the stock down so much? CEO Rowan Trollope is resigning from the firm and the board. Instead, he’s leaving to take the CEO role for a privately held pre-initial public offering (IPO) company.

Current Chairman and former CEO of Five9 Mike Burkland is taking over as CEO.

The stock initially spiked higher on the news in pre-market trading, but it’s since rolled over and has gotten crushed.

Do Investors Have FIVN Stock Wrong?

I am looking at today’s price action and thinking that the market may be overreacting. If this company had reported disastrous results and had its CEO stepping down, then yes, FIVN stock would be getting whacked — and deservedly so.

However, that’s not the case. While the CEO is leaving rather abruptly, Five9 beat earnings and revenue estimates and its own guidance for those metrics. While one quarter doesn’t necessarily offset the news with the CEO, the fact that its chairman and former CEO of 10 years is stepping in to fill the role is a good sign.

To me, it appears that Trollope did not want to act as the CEO anymore. Perhaps his interests were elsewhere. Maybe it was too draining to meet the quarterly demands of shareholders. There could be a long list of reasons why he chose to move on.

Unless FIVN stock reverses course by the end of the week, this week will mark its eighth weekly decline in the last 10 weeks. Granted, there’s a weekly loss in there of just 0.03%, but also a weekly gain of just 0.01%.

Still, the trend has not been friendly, and shares are now 72% off the all-time high and are hitting new 52-week lows. In fact, if FIVN stock falls just 11% from current levels, it will take out its Covid-19 lows.

While Monday’s action may seem like an overreaction, investors must also remember that we’re in a bear market. Surprise headlines do not favor stocks like this.

On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

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