What Happened?
Shares of data storage company NetApp (NASDAQ: NTAP) jumped 2.4% in the morning session after the company reported second-quarter 2025 results that surpassed analyst expectations for both revenue and earnings.
The data storage company posted revenue of $1.56 billion, representing 1.2% year-over-year growth and narrowly beating forecasts of $1.55 billion. Adjusted earnings per share came in at $1.55, also slightly ahead of the consensus estimate of $1.54. Investors were also encouraged by the company's improved profitability, as its operating margin increased to 19.8% from 18.3% in the same quarter last year. Furthermore, NetApp demonstrated strong cash generation, with its free cash flow margin jumping to 46.6% from 19.5% a year ago. For the upcoming quarter, the company expects revenue to be around $1.69 billion, which is in line with analysts' projections.
After the initial pop the shares cooled down to $116.23, up 3.6% from previous close.
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What Is The Market Telling Us
NetApp’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 27 days ago when the stock dropped 3% on the news that a surprisingly weak U.S. jobs report was released, fueling concerns about a slowing economy. The U.S. economy added only 73,000 jobs, falling significantly short of economists' expectations, while figures for May and June were revised down, erasing 258,000 previously reported jobs. The professional and business services industry itself shed 14,000 jobs. This data points to a cooling labor market, fueling concerns of a slowing economy. A weaker economic outlook often leads to reduced corporate spending on key services like IT consulting and professional staffing, which directly impacts the sector's revenue and growth prospects. The report immediately increased investor expectations of an interest rate cut by the Federal Reserve.
NetApp is up 0.3% since the beginning of the year, but at $116.23 per share, it is still trading 11.9% below its 52-week high of $131.91 from August 2024. Investors who bought $1,000 worth of NetApp’s shares 5 years ago would now be looking at an investment worth $2,541.
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