NEW YORK ( TheStreet) -- Marketo (MKTO - Get Report) shares have soared about 69% since its debut on the Nasdaq on May 17 to reach a new 52-week high of $39.80 this week. However, the underlying conviction among funds appears to be weakening as the average daily volume over the past 10 days amounts to just slightly more than half that of the three-month average volume.
The cloud-based marketing software platform reported blowout second-quarter revenue results in July as its customer count increased to 2,592. Despite this, the marketplace's enthusiasm about the future growth of the stock appears to be giving way somewhat to the worries surrounding the company's ability to meaningfully reduce its heavy dependence on the salesforce.com's (CRM - Get Report) ecosystem.
Salesforce.com, the largest maker of customer-management software, in July finished acquiring the email, social and mobile marketing specialist ExactTarget, a competitor to Marketo in the lower-end marketing automation market. It was salesforce's biggest push yet to expand into online marketing, and a deal that was sealed after software giant Oracle (ORCL) in February completed the buyout of one of Marketo's biggest rivals, Eloqua and announced later in June that it has locked in a nine-year cloud computing partnership with salesforce.com in all three tiers of the cloud: applications, platform and infrastructure. Investors have been worried that Marketo will be gradually be pushed aside by salesforce.com given these latest developments and will suffer a diminished relevance.
"They need to diversify away from salesforce.com actively and aggressively," Byron Deeter, a partner at global venture capital firm Bessemer Venture Partners cautioned of Marketo. And if Marketo can move up-market, the company can still do well, he added. Spreading out its risks by branching out its partnership and business market options, even if it means expanding into the higher-end enterprise marketing automation space where Eloqua has historically been stronger, are the best courses of action from here." SAP (SAP - Get Report), Microsoft (MSFT - Get Report), and Adobe (ADBE - Get Report) are the most likely acquirers left," Deeter continued. Though "Adobe is a longshot given their other semi-competitive offerings, and SAP (enterprise) and Microsoft (small or medium businesses) are somewhat at odds." "My guess would be that they