Checking in with Bandwidth Stock After a Big Year

The software stock more than doubled in value in 2020

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Bandwidth Inc. (NASDAQ:BAND) is a software company focused that operates as a cloud-based communications platform service provider. Bandwidth provides software application programming interfaces (or APIs) for voice and messaging to companies like Alphabet (GOOGL), Microsoft (MSFT), Cisco Systems (CSCO), and Zoom Communications (ZM).

Bandwidth stock is a ways off its Oct. 13 record high of $198.60. However, the pullbacks BAND has encountered in November and currently this month have been contained by the shares' 160-day moving average. Year-over-year, the equity is up 123%. 

BAND Stock Chart

A short squeeze could help BAND return to those October highs. Short interest increased by almost 8% in the most recent reporting period and the 8.40 million shares sold short accounts for a healthy 26% of the stock's total available float. At BAND's average pace of trading, it would take more than eight days for shorts to buy back their bearish bets.

Despite its $3.9 billion market cap, Bandwidth is still in its early growing stages. Although the company is growing revenue consistently, the growth rate isn’t sufficient enough at the moment to warrant its current valuation. BAND generated revenue of about $250 million over the past 12 months, and has only grown its net profit by $95 million over the past four years. Nonetheless, Bandwidth stock is demonstrating an overall upward trajectory and positive figures, including a balance sheet with nearly twice their total debt amount in cash and cash equivalents.

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