Following the publication of its results for the third quarter of 2022, OVHcloud drops 21% on the stock market for a week. The company lost more than 40% since the start of 2022 while in the first weeks of its listing on Euronext Paris, in October 2021, the web hosting company gained 30%.
Competition from GAFAM, the shortage of components and losses of 32 million euros in 2021 did not help. Many investors, in these gloomy times on the markets, prefer to turn to profitable companies with greater liquidity (ability of a share to be bought or sold quickly).
OVHcloud has however reassessed his predictions. After a turnover up by 25.9% (202 M€) in the third quarter, the French company expects “an annual revenue growth target at a range of 16% to 18%”much more than the 10 to 15% announced last year and the 15% to 17% of last April.
Analysts did not follow his optimism, especially at Citi. The American banking group, via its analysis office, changed its assessment and OVHcloud lost another 7% on Monday (at 3:20 p.m.), below its listing levels. The French nugget with 33 datacenters around the world has gone from a target price of 30 to only 18 dollars. His file moved to a “neutral” recommendation.
The web host recognized that the macro-economic environment was “degraded” and also explained the difficulties of the enterprise. In commentary, Citi pointed out on July 1: “Management comments indicating a slowdown in demand caused OVH shares to decline sharply yesterday”. Other analysts have decided to re-evaluate the file. JPMorgan dropped its price target from $25 to $22.
In parallel with OVH’s announcement, its competitor Google published a press release announcing the launch of Google Cloud in France with 3 operational datacenters in the Paris region. “Our activity in France is growing rapidly, our French customers are increasingly important”said the head of the French branch of Google Cloud, in an interview with The Digital Factory.
OVHcloud still claims 1 out of 3 websites in France. And in its results, the company boasted of a 50% growth in its international business (outside Europe), to represent 45.5 million euros in the third quarter, up 39.6%. Finally, in the part of the private cloud (125 million euros in turnover), OVHcloud says that its figures are only affected up to 300,000 euros “under commercial gestures relating to the Strasbourg incident”. The share is 200,000 euros for the public cloud.