Tuesday, July 16, 2024

HubSpot Stock Plunges as Google Abandons the Software Company

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hubspot stock - HubSpot Stock Plunges as Google Abandons the Software Company

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HubSpot (NYSE:HUBS) stock closed down more than 12% today on reports that Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) will not go through with a plan to buy the software company. Despite talks of an acquisition earlier in the year, “the sides didn’t reach a point of detailed discussions about due diligence,” according to anonymous sources familiar with the matter.

HubSpot is best known for developing software for small and medium-sized businesses for use in both marketing and customer acquisition. Experts speculated that the purchase of HubSpot would help Alphabet grow its business software revenue, in addition to revenue from its cloud unit.

That said, HubSpot has enjoyed surprisingly strong growth itself recently. The company reported revenue growth of more than 20% for the past six quarters, and more than 30% before that.

Meanwhile, Alphabet hasn’t enjoyed 20% revenue growth since early 2022. It instead reported revenue growth of 15% year over year in its last fiscal quarter.

Unfortunately, investors haven’t been quite as enthusiastic over HUBS stock in 2024. HUBS is down 10% year to date while the S&P 500 is up more than 18%. GOOGL stock is up 38% over the same period.

HubSpot Stock Slides on Cancelled Alphabet Acquisition

Some speculate that regulatory concerns may have played a role in the falling through of the HubSpot purchase. Indeed, a number of major deals have been cancelled amid regulatory scrutiny both in the U.S. and overseas. This includes Amazon’s (NASDAQ:AMZN) planned acquisition of iRobot (NASDAQ:IRBT). Microsoft’s (NASDAQ:MSFT) purchase of Activision Blizzard also took almost two years to close due to antitrust concerns.

Google itself has faced repeated accusations of violating anti-monopoly laws as a result of its deals with phone makers and browsing companies to make its search engine the default for customers.

Had it gone through, HubSpot would’ve marked Google’s largest acquisition to date. With a market capitalization of $25 billion, HubSpot dwarfs Google’s purchase of Motorola back in 2011, which was valued at $12.5 billion.

On the date of publication, Shrey Dua held LONG positions in GOOGL and MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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