INSUBCONTINENT EXCLUSIVE:
Today was an awful day for the stock market, with global and domestic equities falling sharply as the world digested a collapse in oil
prices, and yet another weekend of the spread of COVID-19
All major United States indices were down, with the tech-heavy Nasdaq falling the least of the three, slipping a comparatively modest
7.29%, to 7,950.68 on the day.
However, while the tech index didn''t fare as poorly as other American indices, a critical portion of the
technology market actually fell further than the Dow Jones Industrial Average or the S-P 500: SaaS and cloud stocks, as measured by the
Bessemer-Nasdaq index.
Indeed, the BVP Nasdaq Emerging Cloud Index was off 8.28% today, closing at 1,134.51
That the lowest level that the index has traded at since last October
Putting the basket swings into context, the index is just 7% above its 52-week lows, but 21% off its recent highs (52-week range data via
the excellent Financial Times).
As stocks continue to tumble, what ahead for startups?
That means that SaaS and cloud stocks are off the
requisite 20% needed to classify as in a bear market
A correction is defined as a 10% decline from recent highs
Other major indices arenear the bear market mark, but are still above it
They could easily reach the threshold tomorrow, but SaaS got there first.
What the hell?
It was just three days ago that SaaS stocks
approached the correction threshold
Covering that marker earned me some flak on Twitter, as some folks invested in the success of SaaS read the news item as a dis of the
To the contrary, really, SaaS companies are still richly valued — far above historical norms — and it seems unlikely that investors are
about to price them more cheaply than other types of companies.
However, what does seem clear is that there is less short-term optimism
about SaaS than there was just a few weeks ago, when, in mid-February, companies in the sector set all-time record highs on the public
(We&ve been covering the SaaS run for some time now.)
SaaS companies flirt with correction territory as another wild week comes to a
close
The carnage today was widespread, but not that bad when we take into account resulting revenue multiples
For example:
Atlassian was off 7.87% today, but still had a price/sales multiple of over 23, per YCharts data.
Slack was off 6.13% today,
but had a price/sales multiple at the end of day of 21.24, again according to YCharts.
This doesn''t undercut the pain that public SaaS
companies felt today, or the gut-drop that SaaS startups felt as they watched their leading lights get pummeled on the stock market
But SaaS highfliers are still just that, and the whole category is still expensive
So, pour one out, but just one
Another day or two like today, however, and worry becomes a bit more understandable.
