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A few weeks ago we asked was Splunk the next big thing. Now we have our answer

Just under a month ago, Richard asked me to look at the US software company Splunk (Ticker SPLK US) He wanted me to take a look under the hood and write a brief script for a video that outlined the Pros and Cons of the company and what its prospects were.

That’s exactly what I did, but when I went back to Richard I said that it was hard to find any negatives in the stock.

The stock had recently reported earnings and had guided higher, and around a dozen brokers and banks including UBS & Morgan Stanley had raised their price targets on the name.

The only negative things that I could find to say about the stock were that it traded on a very high price-to-cash flow ratio, had experienced a $12.0 million rise in its cost of sales and at that time, the price had risen +16.00% over the previous five days. If indeed that was a negative.

The overall conclusion was that yes Splunk could indeed be the next big thing.

As it turns out we weren’t the only ones thinking that.

Splunk’s stock price added another +6.0% between the 25th of August and September 20th before leaping by +20.77% to $144.43 yesterday, as internet giant Cisco Systems bid for the company.

Cisco offered $157.00 per share in cash for the business, a 31.0% premium to Wednesday’s closing price valuing Splunk at circa $28.0 billion.

The deal has been approved by both companies and subject to regulatory approval it should close in the summer of 2024.

Speaking about the deal Cisco CEO Chuck Robbins was quoted as saying

“We’re excited to bring Cisco and Splunk together,”

and that

“Our combined capabilities will drive the next generation of AI-enabled security and observability.”

Sometimes you just get a feeling about a stock and Splunk was one of those occasions.

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