Within the first month of 2016, Hortonworks shares have seen a steep fall tanking below
$10 for first time since it got listed on the stock exchange. More noteworthy
has been the fact that its share value eroded around 37% in a single day. However, despite
the aberration, the stock still is a recommended “buy” as per most of the stock
analyst firms.
Hortonworks is the only fully open source Hadoop distribution
currently and has an impressive market share. While relying mainly on services
and support for its revenue, the company may not have been notching up billion
$ revenues but had managed to get a billion $ IPO debut in November 2014. Being
the first to race to stock exchange leaving behind Cloudera and MapR Hadoop distribution
vendors, it has been raising hopes of a 'Red Hat' in data management space.
Tuesday’s (19th Jan 2016) crash may have dented the market
confidence in this Hadoop unicorn. However, Hortonworks may be down for the
moment but is definitely not out. For the full year 2015, Hortonworks estimates
a total revenue of around $120 million – a growth of 129% in year on year
basis. While some eyebrows have been raised at selling of shares by prominent
VPs like Shaun Connolly and Greg Pavlik, they still hold more than 200K shares each of the company.
From this point onwards, there seem to be 2 paths forward
for the company if it needs to hold on competition from the likes of Cloudera
and IBM which have bigger war chests and cash reserves. One is that it
innovates aggressively to make Hadoop a viable alternate to database and not
just the data warehouse to attract 100% of enterprise customers. Second is to
get merged or acquired and there are many suitors for that. Options could range
from Pivotal merger to acquisition by likes of Teradata or HP which already
have a decent stake in the company. In either case, the open source movement
and Hadoop is still going to be intact and will benefit by either of the moves.
Which way does the horton sit would however be clear by Q3
only. And we will keep watching this space.
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