Software stocks set new records despite earnings, pandemic – ProWellTech
The race on which SaaS and cloud stock valuations have been made continues
You could have we got lost, but between the current cycle of political news-M & A-pandemic-election-disinformation that we are in this week, SaaS and cloud companies have reached new public market records.
Yesterday, the Bessemer-Nasdaq cloud index closed at 2,035.54, a new record for the basket of software companies. And, today, the index passed 2,040 points before giving some ground.
The exchange explores startups, markets and money. You can read it every morning on Extra Crunch or receive The Exchange newsletter every Saturday.
What matters for our purposes is that with a good chunk of the second quarter earnings cycle behind us, software companies not only keep their earnings from the start of the year, but manage to add them, albeit with modesty. Of course, the expansion of the valuation during the earnings season could still lead to a slight decrease in multiples; as companies grow, if their shares gain value at a slower pace, their price / sales ratio may lose ground.
Regardless, it is remarkable for our purposes that recent public market gains are not dissipating. Increases in technical valuations helped major American indices to make up for lost ground earlier in the year and second-quarter earnings were a possible threat to previous progress. So far, earnings-related dents have been scarce on the ground.
So what’s going on? Why are SaaS and cloud stocks doing so well? Leaning on the notes of two VCs – Jamin Ball by Redpoint e Maria D’Onofrio from Bessemer: we can undo the sharing of recent valuation maxima.