DNY59/E+ via Getty Images A mud sandwich delivers bad news, the mud, between two pieces of bread to make the bad news seem more palatable. I bought into a mud sandwich from Sprinklr ( NYSE: CXM ) last December after the stock crashed 33.5% post-earnings.
The decline looked excessive given the encouraging long-term narrative from the company, especially reassurances like sticking to 2027 guidance despite acknowledging macro headwinds. Fast-forward to this month’s earnings disaster, the mud is so clearly bad that management left the bread in the pantry. Not only did management acknowledge ongoing macro headwinds but also talked of worsening operational issues and stepped away from 2027 guidance.
A strange and surprising decision to create a co-CEO position in the midst of a hiring spree for new leadership failed to put a floor under the stock. CXM promptly fell 15.1% after a small rebound from a 17-month low.
CXM faces an uncertain path to recover from a second post-earnings collapse. (TradingView.com) In my last post, I drew a line in the sand at $10 below which I would reevaluate my bullish thesis.
With the stock trading well below my threshold, I downgraded CXM to a hold. I see little reason to rush into shares to take advantage of the latest “discount.” Given the deepened risks for CXM, I do not consider shares to be a good buy until valuation reaches rock bottom, for example, around 2x sales.
CXM currently trades at an all-time low 3.2x sales (and 2.4 EV/sales) altho.
