- Oracle share price tumbled after its financial results.
- The company published strong numbers and boosted its guidance.
- The retreat happened as its cloud revenue came short of expectations.
Oracle stock price retreated in extended hours, continuing a strong downtrend that started on June 1, when it peaked at $250. ORCL dropped to $193, down from its closing price of $201. This retreat occurred even after it reported strong numbers that beat on revenue and earnings per share (EPS).
Oracle Stock Drops Despite Strong Earnings and Guidance
Last week, Broadcom, a top player in the technology industry, reported strong financial results but then plunged after its guidance came in weaker than expected.
Today, Oracle stock retreated by over 5% in extended hours after the company reported strong financial results across the board. Its revenue jumped by 21% to $19.1 billion, while the Remaining Performance Obligations (RPO) jumped by $85 billion to $638 billion.
RPO refers to a company’s backlog or the value of the contracted future revenue from products that a company has already sold. In Oracle’s case, most of the RPO is from its large partnership with OpenAI, the creator of ChatGPT.
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The results showed that its cloud revenue jumped 47% to $9.9 billion, while its infrastructure segment rose 93% to $5.8 billion. Its SaaS revenue rose by 12% to $4.1 billion. Its cloud revenue was slightly lower than analysts expected.
For the year, the company made over $67 billion, up by 17%. The management expects its revenue to grow by 29% in the current quarter, a solid figure for a company that has been in the industry for decades. Its cloud revenue will grow by between 57% and 63%. In most cases, the company normally beats its guidance.
The Oracle stock price retreated after management increased the year’s capital raise. After raising $43 billion last year, the company plans to raise $40 billion this year through a combination of equity and debt. $20 billion of this will be through its at-the-market (ATM) raising, which will dilute its shareholders.
ORCL Stock Price Technical Analysis
The daily chart shows that the Oracle share price has pulled back over the past few days, mirroring the broader stock market’s performance. Top US indices like the Nasdaq 100 and S&P 500 have pulled back sharply in the past few days.
The stock plunged to the crucial support level of the 100-day Exponential Moving Average (EMA). It seems to be falling towards the important support level at $170, the highest point on March 11 this year. This price was the neckline of the double-bottom pattern.
Therefore, the stock will likely remain under pressure for a while before rebounding over the next few months as investors buy the dip.
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