• Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
Stock

Is it safe to buy the post-earnings dip in Workday stock?

by May 23, 2025
by May 23, 2025

The Workday stock price suffered a big reversal in the extended session as the company’s forward guidance came short of expectations. WDAY dropped to a low of $253.62, down by 8% from its highest point this month. This article reviews its business performance and whether it is safe to buy the dip.

Workday forward guidance disappoints

Workday stock price crashed as investors scrutinized whether its investment in artificial intelligence tools is paying off. 

This happened after the company’s results showed that its business did well in the first quarter, but warned that its growth would moderate. 

The results showed that its total revenue rose by 12.6% in Q1 to $2.24 billion, while its subscription figures jumped by 13.4% to $2.058 billion. 

Workday’s subscription revenue backlog jumped by 19% to $24.1 billion. However, the operating margin narrowed by 144 basis points to 1.8% to 30.2%. 

These numbers were slightly better than what Wall Street analysts were expecting. However, the forward guidance showed that the company’s subscription revenue for the second quarter will come in at $2.16 billion. 

These investors were anticipating a better performance because of its recent investments in AI. For example, the company introduced Illuminate Agents that are helping companies simplify their hiring. 

It also integrated with Evisort’s AI contract intelligence and contract lifecycle management solutions. 

Workday and other software companies like Zoom Communication, Salesforce, and ServiceNow have all invested heavily in incorporating AI tools in their businesses. Many of them fear that AI-focused companies could disrupt their businesses. 

Workday’s biggest vulnerability is its human resource business, which this disruption could impact. For example, some companies like Eightfold AI have come up with tools to help in talent acquisition, talent management, and other resource management. Other companies seeking to disrupt the industry are Gloat, Aisera, Legion, and Simpplr.

Is WDAY stock overvalued?

Workday expects that its second-quarter revenue will be $2.34 billion, while its operating margin will be about 28%. 

It expects that its annual revenue will rise by 12% to $9.5 billion and its cash flow will increase by 12% to $2.7 billion.

The company has recently announced layoffs of about 8.5% of its workforce to save on costs. It has also continued to repurchase its stock in a bid to boost its earnings per share (EPS).

A key concern among investors has always been about Wokday’s valuation. It has a GAAP P/E ratio of 91 and a non-GAAP multiple of about 31%.

The rule-of-40 is usually the best approach to value SaaS companies as it measures their growth and profitability. In Workday’s case, it has a revenue growth of about 12% and a net income margin of almost 10%. This gives it a rule-of-40 metric of 22. 

Workday also has a levered free cash flow margin of 25%, meaning that the rule of 40 metric in this case is 37%. This figure also shows that the company is overvalued. However, in many cases, SaaS companies can remain overvalued for a long time. 

Workday stock price technical analysis

WDAY stock price chart | Source: TradingView

The daily chart shows that the WDAY share price has been in a strong bullish trend in the past few months. It moved from a low of $205.50 in April to a high of $275.93 on Monday. 

It then made a big down-gap to $253 after its earnings as concerns about its growth continued. 

The most likely scenario is where the stock consolidates at around $250 and then it bounces back ahead of the next quarterly results. This could push it back to $275 in the next few months.

The post Is it safe to buy the post-earnings dip in Workday stock? appeared first on Invezz

0 comment
0
FacebookTwitterPinterestEmail

previous post
Oil prices drop, heading for weekly loss as OPEC+ weighs another supply increase
next post
Why California Gas Prices Are the Highest in America

Related Posts

Cyberattack halts Asahi production, disrupts Japan’s beer supply

October 3, 2025

Europe markets open: Stoxx 600 rises 0.4%, extending...

October 3, 2025

Bitcoin ETFs see over $600M in inflows as...

October 3, 2025

Stockholm leads Europe in IPO activity with $6.8...

October 3, 2025

Indonesia suspends TikTok licence after data refusal during...

October 3, 2025

Why the Thai baht’s climb against US dollar...

October 3, 2025

OpenAI valuation hits $500 billion as employees sell...

October 2, 2025

Here’s why JPMorgan, Morningstar are bullish on Alibaba...

October 2, 2025

Europe markets open: Stoxx 600 jumps 0.6%, led...

October 2, 2025

Will the Tesco share price hit 500p as...

October 2, 2025

Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.

By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

Recent Posts

  • What I Saw in Milei’s Argentina

    October 3, 2025
  • Tariffs Rest on Distrust of Citizens

    October 3, 2025
  • Cyberattack halts Asahi production, disrupts Japan’s beer supply

    October 3, 2025
  • Europe markets open: Stoxx 600 rises 0.4%, extending its record-setting rally

    October 3, 2025
  • Bitcoin ETFs see over $600M in inflows as BTC price nears $120K

    October 3, 2025
  • Stockholm leads Europe in IPO activity with $6.8 billion raised

    October 3, 2025

Editors’ Picks

  • 1

    Meta executives eligible for 200% salary bonus under new pay structure

    February 21, 2025
  • 2

    Walmart earnings preview: What to expect before Thursday’s opening bell

    February 20, 2025
  • 3

    New FBI leader Kash Patel tapped to run ATF as acting director

    February 23, 2025
  • 4

    Cramer reveals a sub-sector of technology that can withstand Trump tariffs

    March 1, 2025
  • 5

    Anthropic’s newly released Claude 3.7 Sonnet can ‘think’ as long as the user wants before giving an answer

    February 25, 2025
  • 6

    Nvidia’s investment in SoundHound wasn’t all that significant after all

    March 1, 2025
  • 7

    Pop Mart reports 188% profit surge, plans aggressive global expansion

    March 26, 2025

Categories

  • Economy (2,770)
  • Editor's Pick (279)
  • Investing (185)
  • Stock (1,885)
  • About us
  • Contact us
  • Privacy Policy
  • Terms & Conditions

Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Portfolio Performance Today
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Copyright © 2025 Portfolioperformancetoday.com All Rights Reserved.

Read alsox

Top 4 reasons why the S&P 500’s...

August 8, 2025

Asian markets open: Nikkei rises 0.91% after...

July 22, 2025

Nippon Steel CEO says US golden share...

June 19, 2025