HubSpot (HUBS) has seen a 48% drop in stock value this year, largely driven by uncertainties surrounding the impact of AI on its operations. The company’s performance has been negatively affected amid the ongoing AI revolution.
However, recent appointments of key executives from Meta, Inc. (META) to HubSpot’s board could leverage Meta’s AI expertise to potentially enhance financial outcomes for small businesses in the long term. There’s also speculation that META might consider acquiring HUBS. While HubSpot is making strides in AI, the stock price is expected to keep declining in the near to medium term.
About HubSpot
HubSpot offers software that automates various essential business functions, like marketing and customer relationship management. Noteworthy clients include WeightWatchers (WW), Motorola Solutions (MSI), and DoorDash (DASH).
In 2024, HUBS reported revenues of $2.6 billion alongside an operating loss of $63.6 million. In the most recent quarter, sales reached $809.5 million, marking an 18% year-over-year increase, excluding currency changes. Operating income improved to $11.2 million from a loss of $9.6 million in the previous year. Yet, the operating margin for Q3 2025 remained low at just 1.4%.
HUBS has a price-to-earnings ratio of 39.5x and a price-to-sales ratio of 7.9x, with a market capitalization of $20.9 billion. Even with recent downturns, the stock has managed to yield an 11.5% return in the month ending November 8.
Signs of Performance Decline
Revenue for HUBS saw a 25% increase in 2023 before the AI wave significantly surged among small to medium-sized enterprises. Conversely, the latest quarter saw only an 18% rise in revenue, excluding currency impacts, which is notably less impressive.
Furthermore, the company’s net profit retention plummeted from over 110% in 2021 to just 103% in the last quarter.
Potential Long-term Advantages from Meta
On November 5, HubSpot announced the addition of Clara See, a leading business AI executive from Meta, to its board. Mr. See brings a wealth of AI knowledge, having recently been involved in key AI endeavors at Meta and Salesforce. Meta has also been enhancing its AI capabilities, regularly rolling out powerful tools and systems, which could benefit HubSpot’s strategic direction.
It seems Meta might be interested in sharing some AI insights with HubSpot, and perhaps they hope to benefit from HUBS’ own AI advancements in return.
In September, HubSpot introduced a “hybrid” development team that integrates AI with human expertise, alongside new tools aimed at maximizing data utilization with AI. Given its two decades of experience in marketing software, HubSpot may possess valuable data to optimize its AI systems for effective marketing strategies.
HUBS is also in the process of acquiring XFunnel, a tool designed to assist businesses in monitoring and optimizing their presence across large-scale language models through Answer Engine Optimization.
The company claims that its Marketing Hub’s AI capabilities have resulted in over a 50% rise in lead conversions for its customers. The promising combination of skills from both HubSpot and Meta could lead to substantial improvements for HUBS over time. However, it often takes several years for these kinds of changes to reflect positively in stock performance optimally.
Add to this the potential for Meta to acquire HubSpot, which could enhance its advertising strategies aimed at small businesses while also benefiting from HUBS’ technology and data.
Conclusion on HUBS Stock
Considering HUBS’s elevated valuation and ongoing concerns regarding the adverse effects of AI, the stock is likely to continue its downward trend for a while. Yet, in the longer term, as its AI tools evolve and businesses recognize their effectiveness, there may be a chance for recovery. Furthermore, HUBS could attract interest from either Meta or other major tech firms regarding potential acquisition opportunities.
