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Investing.com-- Confluent Inc (NASDAQ:CFLT) shares rose 14% in early trading on Wednesday following reports from Reuters that the company is exploring a potential sale after drawing interest from technology companies and private equity firms.
The data infrastructure firm has hired an investment bank to advise on the process, which is at an early stage, the report said.
The move comes as several suitors expressed interest in acquiring the company, whose real-time data streaming technology has become increasingly valuable amid the boom in artificial intelligence.
Confluent’s market value is roughly $7 billion, though its shares have fallen about 26% so far this year, making it more vulnerable to takeover approaches, Reuters reported.
No deal is guaranteed, and Confluent could ultimately remain independent, the report added.
The Mountain View, California-based firm was founded by the creators of Apache Kafka, and its software helps enterprises manage massive, real-time data flows.
Commenting on the potential sale, Wolfe Research analyt Alex Zukin said he is not surprised by the news, given the recent consolidation in the sector. He sees IBM (NYSE:IBM), Snowflake Inc (NYSE:SNOW), and ServiceNow Inc (NYSE:NOW) as potential strategic suitors.
"We think CFLT is a strategic asset and believe IBM, a data platform like SNOW, or NOW would make the most sense, as CFLT provides best-in-class data streaming capabilities that would enable true real-time analytics capabilities across their customer bases, which is increasingly critical as AI applications demand low-latency data processing," Zukin commented.
On price, the analyst sees a potential takeover price of $30 per share, which would imply a valuation of 8x EV/CY26 Revenue.
(Frank DeMatteo contributed to this article)