JFrog Ltd. (NASDAQ:FROG) Stock Rockets 30% As Investors Are Less Pessimistic Than Expected
JFrog Ltd. (NASDAQ:FROG) shares have continued their recent momentum with a 30% gain in the last month alone. Looking back a bit further, it’s encouraging to see the stock is up 93% in the last year.
Following the firm bounce in price, JFrog’s price-to-sales (or “P/S”) ratio of 13.9x might make it look like a strong sell right now compared to other companies in the Software industry in the United States, where around half of the companies have P/S ratios below 4.8x and even P/S below 2x are quite common. However, the P/S might be quite high for a reason and it requires further investigation to determine if it’s justified.
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See our latest analysis for JFrog
NasdaqGS:FROG Price to Sales Ratio vs Industry November 9th 2025
What Does JFrog’s Recent Performance Look Like?
JFrog certainly has been doing a good job lately as it’s been growing revenue more than most other companies. It seems the market expects this form will continue into the future, hence the elevated P/S ratio. If not, then existing shareholders might be a little nervous about the viability of the share price.
Want the full picture on analyst estimates for the company? Then our free report on JFrog will help you uncover what’s on the horizon.
How Is JFrog’s Revenue Growth Trending?
The only time you’d be truly comfortable seeing a P/S as steep as JFrog’s is when the company’s growth is on track to outshine the industry decidedly.
Taking a look back first, we see that the company grew revenue by an impressive 23% last year. Pleasingly, revenue has also lifted 91% in aggregate from three years ago, thanks to the last 12 months of growth. Accordingly, shareholders would have definitely welcomed those medium-term rates of revenue growth.
Turning to the outlook, the next year should generate growth of 17% as estimated by the analysts watching the company. That’s shaping up to be materially lower than the 20% growth forecast for the broader industry.
With this information, we find it concerning that JFrog is trading at a P/S higher than the industry. It seems most investors are hoping for a turnaround in the company’s business prospects, but the analyst cohort is not so confident this will happen. Only the boldest would assume these prices are sustainable as this level of revenue growth is likely to weigh heavily on the share price eventually.
The Key Takeaway
The strong share price surge has lead to JFrog’s P/S soaring as well. Typically, we’d caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
Despite analysts forecasting some poorer-than-industry revenue growth figures for JFrog, this doesn’t appear to be impacting the P/S in the slightest. The weakness in the company’s revenue estimate doesn’t bode well for the elevated P/S, which could take a fall if the revenue sentiment doesn’t improve. This places shareholders’ investments at significant risk and potential investors in danger of paying an excessive premium.
You always need to take note of risks, for example – JFrog has 2 warning signs we think you should be aware of.
If you’re unsure about the strength of JFrog’s business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
