Five9 (FIVN): A Fresh Look at Valuation Following Recent Share Price Shifts

Five9 (FIVN) shares have experienced some movement in recent weeks as investors take a closer look at its latest performance numbers. The cloud contact center provider saw its stock price shift over the past month, a change that reflects evolving sentiment.

See our latest analysis for Five9.

Five9’s latest setback comes on the heels of a tough year for shareholders, with a 1-year total shareholder return down 52.5% and the share price losing momentum over the past quarter. While short bursts of optimism, such as the recent 1-day and 7-day bounce, hint that sentiment isn’t entirely gone, it will take more than a quick rally to shift the long-term trend.

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But given such a steep drop and the company’s improving fundamentals, is Five9 now trading at a bargain, or are investors already factoring in the promise of future growth into the current share price?

Most Popular Narrative: 44.1% Undervalued

Five9’s most widely followed narrative indicates a fair value of $34.76, which stands well above the recent closing price of $19.44. This gap reflects optimism that recent profitability and ongoing AI-driven developments have the potential to re-rate shares higher.

Ongoing large customer wins and multi-year contract expansions that emphasize Five9 as a single, comprehensive CX platform for both core and AI solutions demonstrate sustained demand for scalable, cloud-native contact center offerings. This supports continued enterprise revenue growth and improved dollar-based net retention rates.

Read the complete narrative.

What fuels this big disconnect between narrative fair value and market price? The most closely watched assumptions behind this valuation center on the company’s expected profit margin expansion and a future earnings multiple that is more commonly seen in high-growth stories. Ready to find out what ambitious forecasts are driving these expectations? Get the full story inside the complete narrative.

Result: Fair Value of $34.76 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing executive transitions and intensifying competition across the industry could quickly disrupt Five9's momentum and threaten the bullish narrative that underpins today’s valuations.

Find out about the key risks to this Five9 narrative.

Another View: What Does the Market Multiple Signal?

While the narrative and fair value estimates suggest Five9 is significantly undervalued, a look at the company’s price-to-earnings ratio tells a different story. Five9 trades at 48.6x earnings, which is much higher than the US software industry average of 29.8x, its peers at 33.8x, and the fair ratio of 40x. This kind of premium could mean investors are already pricing in high expectations, which increases the risk if future results fall short. How much faith can we place in these market-based signals?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Five9 Narrative

If you think the story could go a different way or want to dig into the details yourself, you can build your own Five9 assessment in just a few minutes by using Do it your way.

A great starting point for your Five9 research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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