What Happened:

Shares of web content delivery and security company Akamai (NASDAQ:AKAM) fell 11.2% in the morning session after the company reported first-quarter earnings results. Although its EPS beat Wall Street's estimates, its full-year revenue guidance missed analysts' expectations, sending the stock down. Company outlooks have been the big focus this earnings season. On the bright side, the Board authorized a new three-year, $2.0 billion share repurchase program. Overall, the results could have been better.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Akamai? Access our full analysis report here, it's free.

What is the market telling us:

Akamai's shares are not very volatile than the market average and over the last year have had only 2 moves greater than 5%. But moves this big are very rare even for Akamai and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 10.4% on the news that the company reported fourth-quarter results with revenue falling below Wall Street's expectations. Revenue guidance for the next quarter also missed consensus estimates, likely raising questions about the company's growth outlook. Baked into the forward guidance are expectations for a revenue decline in the first half of the year as 7 out of 10 CDN (content delivery network) customers renew their contract. These renewals tend to drive an initial revenue decline before growth picks up as traffic accelerates over time. Overall, this was a weaker quarter for the company.

Akamai is down 21.3% since the beginning of the year, and at $91.97 per share it is trading 28.3% below its 52-week high of $128.32 from February 2024. Investors who bought $1,000 worth of Akamai's shares 5 years ago would now be looking at an investment worth $1,200.

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