Why Confluent Stock Is Plummeting Today: 2025 Crash Explained

Key Takeaways

• Confluent (NASDAQ: CFLT) plunged 18.35% on May 1, 2025, hitting **$19.44\ast \ast —\ast \ast 48.5$37.65 14.
• Q1 2025 results beat expectations (271.1Mrevenuevs.271.1Mrevenuevs.264.4M estimates), but weak guidance triggered a sell-off 24.
• Full-year subscription revenue growth is projected to slow to 19.5%, down from 24.8% YoY in Q1 211.
• Analysts slashed price targets, with Needham cutting from 40to40to26, though maintaining a "Buy" rating 311.
• 66 hedge funds held CFLT as of Q4 2024, but insider selling intensified recently 810.

Q1 Wins vs. Guidance Woes: Why Investors Panicked

Strong Q1 Performance

Confluent reported 24.8% YoY revenue growth ($271.1M),drivenby:✅\ast \ast 34$143M)
✅ 26% growth in subscription revenue ($261M)✅\ast \ast 1,412enterpriseclients\ast \ast spending$100K+ annually 24.

Adjusted EPS of **$0.08\ast \ast alsobeatestimates($0.07), marking a 60% YoY increase 210.

The Guidance Disaster

Despite Q1 beats, management’s soft 2025 outlook shocked investors:

• Q2 subscription revenue guidance: 267M–267M–268M (19% YoY growth, down from 26% in Q1)
• Full-year subscription revenue: 1.1B–1.1B–1.11B (19.5% growth vs. 24.8% in Q1) 211.

CEO Jay Kreps attributed this to macroeconomic uncertainty and reduced spending from large clients 29.

Analyst Reactions: Bullish Long-Term, Bearish Short-Term

Price Target Cuts

Analyst Firm    New Target    Change    Rating
Needham            $26     -35%    Buy
Guggenheim    $31    -18%    Buy
Barclays    $27    -7%    Buy

Bearish Signals

• Insider selling: Executives sold $30M+ in shares in March 2025 8.
• High valuation: P/S ratio of 6.5x and negative P/E (-18.11x) despite losses 910.

Technical Analysis: How Oversold Is CFLT?

• YTD performance: -31.3% 4
• Volatility: 13.4% average weekly swings (vs. 7.8% market average) 9
• Support level: Near $17.79 (52-week low) 9

Should You Buy the Dip?

Bull Case

• $29.25 average price target implies 50% upside from current levels 11.
• AI and data streaming tailwinds: Confluent Cloud’s 34% growth highlights demand for real-time data solutions 410.

Bear Case

• Growth deceleration: Subscription revenue growth could dip below 20% in 2026 2.
• Competition: Rising pressure from cloud giants like AWS and Microsoft Azure 9.

FAQ: Quick Investor Insights

1. Why did CFLT drop 18% today?
   Weak 2025 guidance overshadowed strong Q1 results 24.
2. Is CFLT a good long-term investment?
   Analysts see 22.85% upside, but macroeconomic risks persist 11.
3. What is Confluent’s market cap?
   $8.1B as of May 1, 2025 9.

Happy Trading