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Why Did Ping Identity Shares Surge 60% Yesterday?

Story Highlights

Despite weaker-than-expected Q2 results, Ping Identity shares surged over 60% after the company agreed to a buyout deal worth $2.8 billion.

Shares of Ping Identity (PING) gained more than 60% after the company inked a deal to be acquired by leading software investment firm Thoma Bravo in an all-cash transaction for $28.50 per share, for a total value of $2.8 billion.

Headquartered in Denver, U.S., Ping Identity is a software company that pioneers in intelligent identity. It helps prevent security breaches through a platform that can leverage artificial intelligence and machine learning to analyze device, network, application, and user behavior data to make real-time authentication and security control decisions.

Details of the Acquisition

According to the terms of the deal, Thoma Bravo will pay $28.50 per share. The deal price reflects a 63% premium over Ping’s closing price on August 2, the last trading day before the announcement.

The addition of Thoma Bravo’s robust security software investment and operational expertise will enhance Ping Identity’s cloud transformation growth story, thereby creating industry-leading identity security experiences for clients globally.

The acquisition is expected to close in the fourth quarter of 2022, subject to certain regulatory approvals. Upon completion, Ping Identity’s shares will cease to exist on the NYSE and it will become a privately held company.

Q2 Results Below Expectations

The acquisition news came on the same day that the company reported a worse-than-feared Q2 loss.

During Q2, the company reported an adjusted loss of $0.34 per share, which lagged analysts’ expectations of a loss of $0.12 per share. The company reported earnings of $0.11 per share for the prior-year period.

Further, revenues declined 8.7% year-over-year to $72.03 million and fell short of consensus estimates by $1.27 million.

Positively, however, annual recurring revenue (ARR) grew 22% year-over-year to $341.0 million, marking the sixth straight quarter of growth.

Ping CEO’s Comments

Ping Identity CEO, Andre Durand, commented, “Identity security and frictionless user experiences have become essential in the digital-first economy and Ping Identity is better positioned than ever to capitalize on the growing demand from modern enterprises for robust security solutions.”

Wall Street’s Take on Ping

Following the acquisition news, a number of Wall Street analysts downgraded Ping to a Hold from a Buy rating earlier.

Overall, the stock now has a Hold consensus rating based on four Buys and 12 Holds. The average Ping Identity price target of $25.83 implies 8.01% downside potential from current levels.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 87% Bullish on PING stock, compared to a sector average of 66%.

Key Takeaway

The cybersecurity sector has been on a boom ever since the beginning of the COVID-19 pandemic.

With the deal, the newly formed entity will be able to tap the upside potential in the $50 billion estimated Enterprise Identity security solutions space.

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