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PagerDuty (PD) Is Down 6.4% After Founder Exits Board And RBC Flags AI, Margin Risks

Simply Wall St · 6d ago
  • PagerDuty, Inc. announced that co-founder Alex Solomon retired from its Board of Directors on December 30, 2025, for personal reasons, reducing the Board to nine members and leaving two Class II directors.
  • At the same time, analysts at RBC Capital Markets raised concerns about seat-based pressures, margin growth, and PagerDuty’s positioning in AI, prompting investors to reassess the company’s execution risks.
  • We’ll now examine how RBC’s concerns about seat-based pressures could reshape PagerDuty’s investment narrative and the way investors view its growth drivers.

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PagerDuty Investment Narrative Recap

To own PagerDuty today, you need to believe its Operations Cloud and AI features can keep it essential to digital operations, even as customers optimize seats and budgets. RBC’s downgrade highlights that seat-based pressures and uncertainty around AI positioning are now front and center in the near term, while the key risk is that these pressures could limit revenue expansion; Alex Solomon’s board retirement appears immaterial to these immediate execution questions.

The most relevant recent announcement is RBC Capital Markets’ downgrade of PagerDuty to Sector Perform, citing seat-based pressures, margin concerns, and questions about its AI leadership. This directly intersects with the company’s shift toward usage-based pricing and AI-driven products, sharpening the focus on whether new AI agents and automation capabilities can offset seat optimization and support more durable growth from existing customers.

But beneath the surface, investors should be aware that rising automation and AI adoption could eventually reduce the need for traditional incident management platforms...

Read the full narrative on PagerDuty (it's free!)

PagerDuty’s narrative projects $572.1 million revenue and $74.9 million earnings by 2028. This requires 6.3% yearly revenue growth and a $111.8 million earnings increase from $-36.9 million today.

Uncover how PagerDuty's forecasts yield a $16.75 fair value, a 34% upside to its current price.

Exploring Other Perspectives

PD 1-Year Stock Price Chart
PD 1-Year Stock Price Chart

Three members of the Simply Wall St Community currently place PagerDuty’s fair value between US$12 and about US$26.65, highlighting wide disagreement on upside potential. You are weighing these views against near term concerns that seat optimization and usage based monetization could keep revenue growth uneven and make execution risk harder to ignore.

Explore 3 other fair value estimates on PagerDuty - why the stock might be worth over 2x more than the current price!

Build Your Own PagerDuty Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

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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.