NTAP faces selling pressure due to a 35% drop in free cash flow and high pre-earnings expectations, with analysts viewing the current valuation as fully priced despite better-than-expected results.

Diane, let's start with the fluctuations that occurred even in the post- closing session for NetApp, which achieved strong results in revenue and profits, and raised its forecasts for the entire year.

We were initially on a high, and now of course we are down by about 9%. The question is: What went wrong ? If the earnings exceeded expectations, and if the guidance was slightly better than expected, then what happened here?

It relates to that point I mentioned about generating free cash flow. That was the weak point here. Free cash flow decreased by 35% even as profits and revenues increased. So, the question is how efficiently NetApp converts its profits into cash.

There were also high expectations that prevailed before the report was released. Therefore, achieving better results and raising expectations, as you mentioned, was already largely expected .

Adjusted earnings per share came in at $2.58, which was better than expected. Revenues exceeded the two billion dollar mark.

But listen, this stock came in today up about 60% since the beginning of the year. And now on an annual basis, it's up by approximately 50% , or slightly more before the start of the day.

Therefore, we see investors taking a step back after looking at the reality of free cash flow.

But again, they achieved better-than-expected results , and here are the predictions. They have announced their outlook for the current quarter, forecasting adjusted earnings per share between $2.54 and $2.64.

This is higher than the consensus estimates. Revenue is expected to range between $2.03 billion and $2.08 billion, which is roughly the same level as the last quarter. But management expects growth to continue primarily here.

However, the stock is currently under selling pressure from investors . Regarding the analysts' reaction, you see some adjustments to the target prices, but some of these adjustments are coming from those with a neutral outlook .

Therefore, they believe that the current valuation of the stock has already incorporated all the factors.