What Happened?

Shares of cybersecurity software maker Rapid7 (NASDAQ:RPD) jumped 6.7% in the afternoon session after Reuters reported that publicly traded holding company Cannae is interested in separate talks to acquire Rapid7. The sources added that Cannae has "de-grouped" from activist investor Jana Partners, which had also been actively pursuing the acquisition of Rapid7.

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What The Market Is Telling Us

Rapid7’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 7 months ago when the stock dropped 21.2% on the news that the company reported weak first quarter earnings results. While revenue and EPS narrowly topped Wall Street's estimates, its full-year revenue guidance fell short, and was lowered. In addition, its free cash flow was down 54.3% from the previous quarter. Overall, this was a subpar quarter for Rapid7.

Rapid7 is down 24.4% since the beginning of the year, and at $41.57 per share, it is trading 32.4% below its 52-week high of $61.47 from February 2024. Investors who bought $1,000 worth of Rapid7’s shares 5 years ago would now be looking at an investment worth $733.80.

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