Why Sprout Social Shares Got Crushed Friday

Cloud software company Sprout Social SPT saw shared fell 40% Friday after reporting first-quarter financial results Thursday.

What Happened: Sprout Social reported first-quarter revenue of $96.87 million, which missed a Street consensus estimate of $97.31 million, according to data from Benzinga Pro.

The company's earnings per share of 10 cents beat a Street consensus estimate of 1 cent per share.

Shares of Sprout Social likely fell related to second-quarter guidance and commentary from the company.

The company is guiding for second-quarter revenue to come in a range of $98.5 million to $98.6 million.

"We underestimated the magnitude of enterprise seasonality that now comes with our business mix, while also self-inducing sales execution headwinds during Q1 that we believe were important to position us for future success," Sprout Social Chief Financial Officer Joe Del Preto said.

The CFO said the underperformance of the first quarter factored into guidance as the company tightens its strategic focus.

"We believe we're now positioned for greater long-term success."

Analysts Downgrade And Cut Price Targets: Multiple analysts downgraded the stock and cut price targets after the first-quarter results and second-quarter guidance.

Here are the recent analyst ratings on Sprout Social.

• KeyBanc: Downgrade from Overweight to Sector Weight, no price target
• Morgan Stanley: Equal-Weight rating, lower price target from $65 to $49
• Cantor Fitzgerald: Overweight rating, lower price target from $46 to $74
• Barclays: Overweight rating, lower price target from $72 to $50
• Oppenheimer: Outperform rating, lower price target from $76 to $43
• Needham: Buy rating, lower price target from $72 to $55
• BTIG: Downgrade From Buy to Neutral, no price target  
• Baird: Downgrade from Outperform to Neutral, lower price target from $72 to $45
• Piper Sandler: Downgrade from Overweight to Neutral, lower price target from $66 to $40

SPT Price Action: Sprout Social shares were down 40% to $28.82 on Friday, hitting new 52-week lows.

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