Splunk Inc. Stock Running Out Of Juice After 7% Rise Last Week?

Splunk Inc. stock (NASDAQ: SPLK) has gained almost 7% in the past week and currently trades at around $146 per share. Additionally, Splunk, a data analysis software company, has seen its stock lose more than 7% over the last month, dropping from $157. However, the company’s recent Q2 2022 earnings (SPLK’s fiscal year ends in January) reported in late August saw revenue rise from $492 million in Q2 ’21 to $606 million in Q2 ’22, driven primarily by a rise in cloud services revenue. However, a jump across all expense heads, saw operating loss expand from $239 million to $344 million, with EPS dropping from -$1.64 in Q2 ’21 to -$2.34 in Q2 ’22.

Now, after the recent rally, will SPLK stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for Splunk stock average 2% (implying an increase in stock price from $146 to $149) in the next one-month (twenty-one trading days) period after experiencing a 6.5% rise over the previous week (five trading days).

But how would these numbers change if you are interested in holding Splunk stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Splunk stock price forecast after a rise or fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day. For additional details about Splunk historical returns, and return comparison to peers see Splunk (SPLK) Stock Return.

MACHINE LEARNING ENGINE – try it yourself:

If Splunk stock moved by -5% over five trading days, THEN over the next twenty-one trading days Splunk stock moves an average of 2.2%, with an average 53.8% probability of a positive return over this period.

Also, given a -5% movement for the stock over five trading days, it has historically witnessed an excess return of 0.6% compared to the S&P500 over the next 21 trading days, with an average 49.6% probability of a positive excess return.

Some Fun Scenarios, FAQs & Making Sense of Splunk Stock Movements:

Question 1: Is the price forecast for Splunk stock higher after a drop?

Answer: Consider two situations,

Case 1: Splunk stock drops by 5% or more in a week

Case 2: Splunk stock rises by 5% or more in a week

Is the average return for Splunk stock higher over the subsequent month after Case 1 or Case 2?

Splunk stock fares better after Case 1, with an expected return of 2.2% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 1.9% for Case 2. This implies a price forecast of $149.75 in Case 1 and a figure of $146.46 in Case 2 using Splunk market price of $146.46 on 10/7/2021.

In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Splunk stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Splunk stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For Splunk stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Splunk after a larger loss over the last week, month, or quarter.

Question 3: What about the stock price forecast after a rise if you wait for a while?

Answer:  The expected return after a rise is understandably lower than after a drop as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

It’s pretty powerful to test the trend for yourself for Splunk stock by changing the inputs in the charts above.