Sprout Social under pressure following short report from Akram’s Razor

Shares of Sprout Social are under pressure after Akram’s Razor published a short report on the company, saying it sees 40%-60% downside over the next 6 months. The Razor’s Edge report says Sprout Social is "one of the best short setups" it has come across in a while. "Despite a very transparent slowdown in the business’s organic customer growth, shares have drastically outperformed SaaS peers throughout the worst market for Software stocks in 20 years and now sell at a huge premium to the space. This thesis combines a nosebleed valuation outlier with a variant perception supported by data and customer calls, describing a company expected to grow in the 30s endlessly, but which is actually about to collide headlong into a near-term growth wall – the set-up is fabulous," the report claims. "Consensus believes Sprout is going to grow 30% this year and again next year. I believe Sprout’s growth will stall in the latter part of this year and may be a single-digit grower in 2024, possibly far worse if Sprinklr’s recent strategic pivot is a big success." Overall, The Razor’s Edge states that, "The short offers 40%-60% downside over the next six months and is in my opinion the best risk/reward short in the entire SaaS sector." Shares of Sprout Social have dropped almost 12% to $51.25 in Wednesday morning trading. Reference Link