Reasons for Harmonic Stock Surge Despite Nasdaq Decline

Harmonic Stock Skyrockets Despite Revenue Decline

In a surprising turn of events, shares of video-streaming technology company Harmonic (NASDAQ: HLIT) surged 15% following the release of its first-quarter financial results for 2024. This significant increase stood in stark contrast to the Nasdaq’s 1% drop on Tuesday.

Despite a 23% year-over-year decrease in revenue, with broadband-segment revenue down 21% and video-segment revenue down 25%, investors remained optimistic about Harmonic’s future. The company also reported a decrease in gross margin and a net loss of $8 million, compared to a net income of $5 million in the previous year.

The key factor driving the stock’s rise was Harmonic’s record backlog of $678 million, up 9% from the previous year. This backlog suggests potential revenue growth in the near future as it is realized.

Harmonic’s video segment, which accounted for 35% of its Q1 revenue, has shown promise. The company’s technology enhances live-streaming capabilities, particularly for sports events, and boasts major customers like Comcast and Charter Communications.

While the decision to retain the video segment was strategic, Harmonic still faces challenges in growing this part of the business and achieving consistent profitability. Incoming CEO Nimrod Ben-Natan is expected to address these issues during the company’s upcoming investor-day presentation on June 13.

Despite the revenue decline, investors remain hopeful about Harmonic’s future prospects, driven by the potential for revenue growth from its record backlog and the strategic focus on its high-margin video segment.