PLAN - Why Is Anaplan (PLAN) Stock Up Today?
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Thoma Bravo has a plan to gain exposure to the cloud software market. The private equity firm announced yesterday that it would acquire Anaplan (NYSE:PLAN), a software as a service company with a focus on data. PLAN stock has been rising steadily this morning as momentum surrounding the deal mounts.
What’s Happening With PLAN Stock
The news of the acquisition has clearly helped PLAN stock.
As of this writing, PLAN is up more than 27% for the day. While the stock still hasn’t reached its 52-week high of $70.25 per share, news of the deal has propelled it to just below that key level.
Why It Matters
Bravo’s offer is for $66 per share, totaling roughly $10.7 billion. This represents a premium of roughly 30% from its March 18 closing price.
For the past few months, cloud software stocks have been in correction mode. However, as Axios notes, this has clearly made them more attractive for many investors. With this in mind, Thoma Bravo is not the only firm that has expressed interest in Anaplan. In fact, CNBC reported last week that two activist hedge funds had revealed stakes in PLAN stock.
What this should signify is that large investors see opportunity in cloud software. Put another way, industry experts see this as a buy-the-dip opportunity that retail investors shouldn’t be ignoring.
It’s not hard to see why. This may be a turbulent time for markets, but the demand for cloud software isn’t going away. In fact, research indicates that it is expected to continue expanding rapidly. According to Markets and Markets, it should reach nearly $1 billion by 2026 with a compound annual growth rate (CAGR) of 16.3%.
What It Means
This is the type of deal that investors shouldn’t be ignoring. It remains to be seen how far news of the acquisition can take PLAN stock before it goes private. But, regardless of how long the current momentum lasts, it is a safe bet that cloud computing stocks are going to rebound. This acquisition should be a wake-up call for any investors who remain bearish on the sector.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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