Shares in software maker New Relic surged just before the market close on Wednesday amid speculation of a possible buyout. NEWR stock ended the day up nearly 11%.
Private-equity firms Francisco Partners and TPG are readying a bid around $5 billion for NEWR stock, according to a report in the Wall Street Journal.
New Relic's computer network monitoring tools measure and analyze the performance of business-critical applications. Further, many of its customers use cloud-computing platforms.
Rivals include Dynatrace, Datadog, Cisco Systems and Splunk.
NEWR Stock: Activist Investors
Activist investors owning shares in New Relic include JANA Partners and Engaged Capital.
In a note to clients earlier this year, NEWR stock analyst Adam Tindle of Raymond James said: "Case for takeout: (New Relic) optimizing the margin profile to run closer to competitor Dynatrace should be possible and create value."
Tindle also added: "The company has hit an inflection point in the back half of 2022, with margins returning and growth potentially accelerating amid a challenging spending environment. Activist investors see the longer-term prospects to drive increased shareholder value beyond the immediate term and constructively support the growth and margin expansion journey."
NEWR stock advanced nearly 11% to end the day at 83.84 during Wednesday's regular session. Further, in extended trading, shares rose 0.2% to 84 on the stock market today.
New Relic was profiled as the IBD Stock of the Day on April 19.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
