Why Did Oracle Stock Fall So Much in the Last Year?
Will Oracle Meet 3Q16 Expectations, or Is Its Head in the Cloud?
Oracle stock fell more than 15% in last one year
Previously in the series, we discussed market expectations from Oracle’s (ORCL) soon-to-be-announced fiscal 2Q16 results. Like its peers in the software space, including IBM (IBM), Oracle is struggling with revenue growth and trying desperately to make a mark in the cloud space. As we stated in our fiscal 2Q16 earnings series, there are the following key factors that weigh heavily on Oracle’s share price:
the company’s ongoing transition to the cloud
stiff competition in the cloud space
the rising dollar (UUP)
If we look at Oracle’s share price movement, as you can see in the graph below, Oracle stock more or less fell in 2015. This continued in January 2016. In the last one year, Oracle’s share price has fallen by 15%. Declining revenue growth as well as a decline in its earnings have significantly contributed to this fall.
Oracle stock was buoyed marginally in 2016
During its fall in January 2016, Oracle stock was upgraded to “buy” by Kirk Materne, senior managing director at Evercore. As the above chart shows, since February 2016, the share price has gotten a little boost. Oracle’s cloud offerings announced at Oracle CloudWorld held in late January 2016 could have contributed to the rise in Oracle stock.
Amazon (AMZN) leads the overall cloud space. In March 2016, TheStreet upgraded Oracle Stock from a “hold” to a “buy” rating.
You might consider investing in the SPDR S&P 500 ETF (SPY) to gain exposure to Oracle, which makes up 0.7% of SPY. Investors who would like application software exposure could also consider SPY. Application software makes up ~7% of SPY.
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