What Happened?
Shares of digital knowledge management company Yext (NYSE: YEXT) jumped 10.6% in the morning session after its Chairman and CEO, Michael Walrath, submitted a non-binding proposal to acquire all outstanding shares of the company he doesn't already own for $9.00 per share in cash. The offer prompted the company's board to form a special committee of independent directors to evaluate the proposal and explore other options. Mr. Walrath indicated that the proposal is backed by reputable financing sources. In a separate announcement, Yext stated it expects its second-quarter results to be within or better than its previously issued guidance. However, in light of the acquisition offer, the company withdrew its financial guidance for the full fiscal year 2026.
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What Is The Market Telling Us
Yext’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Yext and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 3.4% on the news that markets pulled back as a hotter-than-expected wholesale inflation report for July dampened hopes for a Federal Reserve interest rate cut. The U.S. Producer Price Index (PPI), a key measure of wholesale inflation, rose 0.9% month-over-month in July, far exceeding the 0.2% increase that economists had predicted. Annually, prices at the wholesale level jumped 3.3%, also surpassing the 2.5% forecast. This hotter-than-expected data has poured cold water on widespread expectations for an interest rate cut from the Federal Reserve next month. Persistent inflation makes it less likely for the central bank to ease monetary policy. Sectors with high-growth stocks, such as SaaS, are particularly sensitive to interest rate changes, as the prospect of higher rates for longer can diminish the present value of their future earnings, leading to a decline in stock prices.
Yext is up 38% since the beginning of the year, and at $9.02 per share, has set a new 52-week high. Investors who bought $1,000 worth of Yext’s shares 5 years ago would now be looking at an investment worth $519.76.
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