What Happened?
Shares of office and call centre communications software provider RingCentral (NYSE: RNG) jumped 6.6% in the after-market session after the company announced an expanded partnership with AT&T, amid a broader rally in software stocks.
The collaboration introduced new AI-powered tools to AT&T's business communications portfolio, including RingCentral's contact center and conversational intelligence solutions. These additions were designed to help businesses improve customer experiences. The positive company news was amplified by a favorable market environment for Software as a Service (SaaS) stocks. A weaker-than-expected U.S. jobs report increased investor expectations for a Federal Reserve interest rate cut, which generally boosted valuations for growth sectors like technology.
After the initial pop the shares cooled down to $23.76, up 0.6% from previous close.
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What Is The Market Telling Us
RingCentral’s shares are quite volatile and have had 18 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 previous big move we wrote about was 3 days ago when the stock dropped 4.8% on the news that the White House announced a new round of steep global tariffs, sparking concerns of a trade war and its impact on the U.S. and global economies. This move created significant uncertainty for businesses and investors. The new tariffs, with rates of up to 41% on imports from 68 countries and the European Union, prompted a broad market sell-off, with the tech-heavy Nasdaq index showing notable weakness.
Adding to the bearish sentiment was a weaker-than-expected July jobs report, which revealed that employers created only 73,000 jobs, far below economists' expectations. This combination of trade fears and signs of a slowing labor market has created a "risk-off" environment, leading investors to pull back from growth-oriented sectors like software and technology.
RingCentral is down 31.8% since the beginning of the year, and at $23.76 per share, it is trading 43.2% below its 52-week high of $41.82 from December 2024. Investors who bought $1,000 worth of RingCentral’s shares 5 years ago would now be looking at an investment worth $80.30.
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