So I firmly believe the market has over-discounted SaaS and Cloud stocks, that they are trading just too low. They shouldn’t be at almost historical lows, given the still epic growth rates at so many leaders, from MongoDB to Cloudflare to Monday to ZoomInfo. Some are growing more slowly than earlier in the year, but still in absolute terms, the growth rates are jaw dropping.
But it’s crazy times with interest rates in one year going from zero to closer to historical norms, and inflation like we haven’t seen in a very long time.
Where does that leave us, going into the end of 2022?
Back to where we were in the markets.
In fact, as of the other day, almost exactly where we were 3 years ago from a share price perspective in EMCLOUD, a basket of leading SaaS and Cloud stocks:
Now of course, in reality, it’s worse than that, because those companies have grown so much, it’s actually a decline in metrics. Share prices not in the end budging for 3+ years when ARR in many cases has doubled or tripled is worse than the flat share prices reflect.
But it’s a visceral reminder that at least for now, all the Covid boosts are long behind us. We didn’t really get much of a Cloud boost from all of that, at least not in most cases.
We’re back to 2019.
So be it. Cloud is still growing, SaaS is still in the early and middle innings.
It’s just, the go-go times of the last few years, well, they are now completely behind us.
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Jason Lemkin, Khareem Sudlow
