What Happened?

Shares of cybersecurity software maker Rapid7 (NASDAQ:RPD) jumped 7% in the morning session after a securities filing revealed that activist investor Jana Partners increased its stake in the business (RPD) to 13%. This move is notable given that activist investors often bring about significant changes in targeted companies, focusing on improving asset monetization, expense efficiency, and stock buybacks. This update corroborates the previous report by the Wall Street Journal (June 26, 2024), highlighting that Jana had taken a significant position in Rapid7 in a move that could signal a push for the company's (RPD) eventual sale.

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What The Market Is Telling Us

Rapid7’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 5 months ago when the stock dropped 21.2% on the news that the company reported first quarter earnings results. While revenue and EPS narrowly topped Wall Street's estimates, its full-year revenue guidance fell short, and was lowered. In addition, its free cash flow was down significantly from the previous quarter. Overall, this was a subpar quarter for Rapid7.

Rapid7 is down 27.5% since the beginning of the year, and at $39.87 per share, it is trading 35.1% below its 52-week high of $61.47 from February 2024. Investors who bought $1,000 worth of Rapid7’s shares 5 years ago would now be looking at an investment worth $878.39.

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