Tibco Drops on Earnings: Don't Buy Just Yet

| About: TIBCO Software, (TIBX)

Shares of Tibco Software (NASDAQ:TIBX) fell hard on Tuesday. After the company reported its first quarter results (see conference call transcript here), TIBX shares were down nearly 6% after hours, having touched a 52-week high of $26.99 earlier that day. The company reported earnings of $27.3 million, or $0.16 per share on a non-GAAP basis - a 33% gain. Total revenues were $185.3 million, a record for the quarter. License revenue came in at $70.1 million, which was also a record.

While the numbers from the company are pretty strong, it looks as though they are not strong enough to support shares at these levels. The stock is trading at 57x earnings, and investors appear to be disappointed that the company only beat EPS estimates by a penny. The CEO cited "the push for mobility, the emergence of the cloud, and the demand for social collaboration" as strong drivers for the business, managing to hit on several buzzwords for tech investors all in one statement. Given the space that the stock is in, it appears that expectations were too high; investors were apparently looking for stronger numbers than were realistic.

Shares have more than doubled over the last 52-weeks, closing at $26.27 on Tuesday. In extended hours trading, shares were down 5.5% on nearly a million shares in volume, last changing hands at $24.84. Investors should see where TIBX shakes out before adding capital to the name, given the run in shares and the violent moves that higher PE stocks can have on disappointing earnings. Investors should look for support at the 50-day moving average around $24.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.