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Cloudera: Buy The Crash

Apr. 04, 2018 7:23 AM ETCloudera, Inc. (CLDR)38 Comments
Gary Alexander profile picture
Gary Alexander


  • Cloudera's stock tanked 27% after posting Q4 results.
  • The company posted a significant beat to fourth-quarter expectations, but missed terribly on FY19 guidance.
  • FY19 guidance of $435-$445 million implies just 20% y/y growth, after growing 41% this year.
  • Such steep deceleration is difficult to believe, and Cloudera will likely outperform against its guidance as per usual. The selloff will be short-lived.
  • Cloudera will host an investor day on April 12, where more clarity will likely be shed on the guidance issue.

Take a deep breath, Cloudera (NYSE:CLDR) investors. As a fellow longtime Cloudera long, I was stung by the news that my position crumbled 27% in after-hours trading despite a strong fourth-quarter release, virtually decimating all the gains the stock has made in recent months.

Cloudera - the open source Hadoop software company - is widely recognized as one of the most ill-performing software IPOs of 2017. Versus other high fliers that went public around the same time like Alteryx (AYX) and Appian (APPN), which have each doubled from their IPO price, Cloudera has stagnated for the past year. Things began looking up in March, when the stock broke past $20 despite a wider tech pullback - but these gains were instantly crushed right after the company's Q4 earnings and guidance release. See Cloudera's year-to-date chart below:

ChartCLDR data by YCharts

The pain is magnified now, but it's likely to be short-lived. Cloudera has beat earnings expectations by a wide margin in every single quarter since going public - it's carved out a reputation as a serial conservative guidance-giver, a classic '"underpromise, overdeliver" schema. This quarter the company beat its guidance range and Wall Street consensus by 7%; last quarter, it beat by 5%.

If we apply this ~5% buffer on top of the 20% y/y guidance that Cloudera gave for FY19, we can bridge the gap to Wall Street's consensus expectations for FY19. There's no justifiable reason for this fantastic, fast-growing data software company with huge industry tailwinds and strong customer recognition to suddenly see its >40% growth rate get cut in half next year. Investors might get the short end of the stick now with the poor guidance range, but Cloudera will make up for it with a continued succession of "beat-and-raise" quarters in FY19 as it did this year. In fact, Cloudera management specifically pointed out that its FY19 guidance was based

This article was written by

Gary Alexander profile picture
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I am/we are long CLDR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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