TLDR
- Confluent (CFLT) stock surged over 10% on Wednesday after reports emerged that the company is exploring a potential sale
- The Mountain View, California-based data streaming firm is working with an investment bank on the sale process
- Multiple private equity firms and technology companies have expressed interest in acquiring Confluent
- Wolfe Research raised its price target to $30 from $22, citing increased consolidation in the data management sector
- Despite Wednesday’s gains, CFLT shares remain down roughly 25% for 2025 after losing a major customer in July
Confluent stock climbed over 10% in early trading Wednesday following reports that the data streaming company has started exploring a sale. Reuters broke the news, citing sources familiar with the matter.
The company is working with an investment bank to manage the sale process. Several private equity firms and technology companies have already expressed interest in acquiring the business.
Confluent did not immediately respond to requests for comment on the reports. The company is based in Mountain View, California.
The timing comes as artificial intelligence continues driving demand for infrastructure companies. Real-time continuous data has become increasingly important for AI applications.
Wolfe Research responded to the news by raising its price target on Confluent from $22 to $30. The firm maintained its Outperform rating on the stock.
Potential Buyers and Strategic Value
Wolfe Research noted it was not surprised by the sale exploration given recent consolidation in the data management sector. The firm views Confluent as a strategic asset in data streaming.
The research firm suggested several potential acquirers that would make sense strategically. These include IBM, data platforms like Snowflake, and ServiceNow.
Confluent’s data streaming capabilities would enable real-time analytics across customer bases for these companies. The technology is becoming increasingly critical as AI applications demand low-latency data processing.
Wolfe Research estimates a potential takeout price around $30 per share. This would represent approximately 8x EV/CY26 Revenue.
The valuation would mark roughly a 30% premium to similar growth companies. It would be in line with IBM’s acquisition of HCP in April 2024.
Recent Performance and Challenges
Despite Wednesday’s rally, Confluent shares remain down for the year. The stock entered the trading session down roughly 25% for 2025.
The company has struggled to recover since July. That’s when shares plunged after Confluent reported losing business from a major customer.
The stock has not returned to its pre-July levels. However, the sale exploration news provided a lift to the share price.
In May, Salesforce struck an $8 billion deal to buy AI-based data management software provider Informatica. This transaction highlighted the value of companies supporting AI infrastructure.
Confluent recently announced second-quarter results that slightly exceeded expectations. The company also raised its calendar year 2025 subscription revenue guidance.
However, some analysts have expressed concerns about cloud growth and pressures from large customer optimizations. DA Davidson and Needham both lowered their price targets to $24 in recent weeks.
Wells Fargo took a different view, initiating coverage with an Overweight rating. The firm expressed optimism about Confluent’s potential as an AI beneficiary.
The company recently appointed Stephen Deasy as its new Chief Technology Officer. He will focus on enhancing Confluent’s AI capabilities and real-time intelligence.
Confluent also announced a partnership with the Visa Cash App Racing Bulls Formula 1 team. The company’s logo will appear on the team’s car as part of the multi-year deal.
