Sprout Social (SPT) Fell Following Reduced Guidance

SPT +1.53%

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equities hit a record high in the third quarter, fueled by continued gains in technology and falling bond yields. Easing tariff rhetoric and renewed AI infrastructure investments boosted large tech stocks. In mid-September U.S. Federal Reserve lowered rates by 25 basis points. Against this backdrop, the fund returned -1.78% (net) compared to the Russell 2500 Growth Index’s 10.73% return. Sector positioning and the avoidance of names that do not meet the firm’s strict investment discipline led to the underperformance of the fund in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Meridian Growth Fund highlighted stocks such as Sprout Social, Inc. (NASDAQ:SPT). Sprout Social, Inc. (NASDAQ:SPT) designs, develops, and operates a web-based social media management platform.  The one-month return of Sprout Social, Inc. (NASDAQ:SPT) was -4.04%, and its shares lost 68.30% of their value over the last 52 weeks. On November 28, 2025, Sprout Social, Inc. (NASDAQ:SPT) stock closed at $9.97 per share, with a market capitalization of $590.118 million.

Meridian Growth Fund stated the following regarding Sprout Social, Inc. (NASDAQ:SPT) in its third quarter 2025 investor letter:

"Sprout Social, Inc. (NASDAQ:SPT) provides a leading platform that enables businesses to manage, monitor, and optimize their social media presence. The company’s platform is recognized for its intuitive design, ease of deployment, and direct integrations across major social networks—features that underpin its competitive advantage. Despite delivering results ahead of expectations, the stock underperformed during the period following another reduction in forward guidance. In a market environment increasingly rewarding a “beat and raise” pattern, this guidance reset overshadowed otherwise solid execution. We believe the resulting pullback was excessive, given Sprout’s durable double-digit growth trajectory, expanding margin profile, and compelling valuation. With a strong competitive position and growing relevance to modern enterprises, we used the share price weakness as an opportunity to modestly increase our position during the period."

Sprout Social, Inc. (NASDAQ:SPT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Sprout Social, Inc. (NASDAQ:SPT) at the end of the third quarter, which was 29 in the previous quarter. In the third quarter of 2025, Sprout Social, Inc. (NASDAQ:SPT) reported revenue of $115.6 million, representing a 13% year-over-year growth. While we acknowledge the potential of Sprout Social, Inc. (NASDAQ:SPT) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Sprout Social, Inc. (NASDAQ:SPT) and shared the list of oversold software stocks to buy. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.