What Happened:

Shares of data protection and security software company Varonis (NASDAQ:VRNS) fell 7.7% in the morning session after the company announced plans to offer $350 million in Convertible Senior Notes due in 2029 to qualified institutional buyers. The stock is likely down due to concerns about the dilutive effect of the notes, which can be converted to the company's ordinary stock, raising the total share count.

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 Varonis? Access our full analysis report here, it’s free.

What is the market telling us:

Varonis’s shares are very volatile and over the last year have had 7 moves greater than 5%. In context of that, today’s move is indicating 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 about a month ago, when the stock gained 12.9% on the news that the company reported a "beat and raise" quarter. Second-quarter earnings result exceeded Wall Street's revenue and EPS expectations. In addition, it was great to see Varonis' optimistic revenue guidance and outlook for the next quarter, which exceeded analysts' expectations. Precisely, the third quarter is expected to benefit from solid contributions from the Fed vertical. Similarly, full-year revenue guidance was raised and came in ahead of consensus. Overall, this was a strong quarter that should satisfy shareholders.

Varonis is up 16% since the beginning of the year, but at $51.66 per share it is still trading 10.2% below its 52-week high of $57.54 from August 2024. Investors who bought $1,000 worth of Varonis’s shares 5 years ago would now be looking at an investment worth $2,212.

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