HubSpot shares plunge 12% on report that Alphabet is shelving interest in acquiring software company

HubSpot shares plunged 12% on Wednesday after a report said Alphabet isn’t going forward with plans to buy the software company.

According to Bloomberg, Alphabet was in talks with HubSpot earlier this year, “but the sides didn’t reach a point of detailed discussions about due diligence,” the report said, citing people with knowledge of the matter.

Representatives for HubSpot and Google parent Alphabet didn’t immediately respond to requests for comment.

Regulators in the U.S. and abroad have pushed back on deals that large technology companies have proposed recently. Amazon abandoned its planned acquisition of robot vacuum maker iRobot, and it took Microsoft 20 months to close its purchase of game publisher Activision Blizzard.

HubSpot develops software that companies, mostly small and medium-sized businesses, use to automate marketing and reach prospective customers. Buying HubSpot would have helped Google grow revenue from business software, alongside cloud infrastructure, as well as other non-cloud businesses under the Alphabet umbrella.

Google’s cloud unit reached profitability in 2023 after years of hefty investment.

HubSpot has been growing more rapidly than Google of late, with the company reporting revenue growth above 20% for the past six quarters and in excess of 30% prior to that. Sales in the first quarter increased 23% to $617.4 million.

Former Dropbox and Workday executive Yamini Rangan has run HubSpot since 2021. In March, she pointed to a challenging business climate, where, and said there were “more proof of concepts before customers got ready to make purchase decisions.”

Alphabet hasn’t topped 20% growth since early 2022. Revenue in the latest period rose 15% from a year earlier to $80.54 billion.

Google is already facing regulatory scrutiny. The U.S. Justice Department and a collection of state attorneys general accused Google of violating anti-monopoly law through exclusive agreements with phone makers and browser companies to make its search engine the default for consumers.

Even after Wednesday’s drop, HubSpot has a market cap of $25 billion, making it twice the size of Google’s largest deal, which was the $12.5 billion Motorola Mobility acquisition in 2011.

Read Bloomberg’s full report here.

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