PagerDuty is an enterprise software company with a growing suite of tools to help make businesses more efficient. Shares climbed 21% last month, and investment guru Cathie Wood has been pouring money in since the end of May. But is PagerDuty actually a good buy? Possibly, but it’s a bit of a mixed bag.
Reasons for Optimism
PagerDuty seems to be having a moment. Its revenue is expected to grow by double digits this fiscal year, and to accelerate in each of the next two years. The company’s adjusted profitability should also rise by about 14% next year and another 24% by 2027. In addition, there are still plenty of naysayers, which has driven 12% of the company’s stocks to short sales in recent weeks. The more short sales, the higher share prices can go.
Reasons for Pessimism
Still, all is not rosy at PagerDuty. The company’s YOY revenue growth has decelerated in the past seven consecutive quarters. Paid customer numbers remain static, and its dollar-based net retention rate is actually down a bit. In addition, PagerDuty has yet to turn a profit on a reported basis. There are some reasons for optimism, but they need to be tempered by the fact that the company has yet to prove itself.
Cathie Wood remains highly optimistic about PagerDuty, but many of her recent picks have been head scratchers. Relying on her opinion could prove problematic for investors. Still, some analysts are starting to predict a turnaround. If you’re looking for rapid short-term gains, it may be best to look elsewhere. If you’re a long-term investor who is comfortable with some risk, though, PagerDuty may be a good choice. Only time will tell whether the current signs of progress will blossom into full-scale growth.
Neither Lisa Fritscher nor Stocks.News have positions in this company.
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Contributing Writer
Lisa Fritscher has been a contributing writer for App.Stock.News since 2024. Lisa has been interested in investing since winning The Stock Market Game in high school. In more than a decade as a professional writer, she has written consumer-facing financial information and advice articles for a wide variety of publications. She has a Bachelor of Arts in Psychology from the University of South Flori...