What happens with the cost SaaS companysales Dragun | 25.05.2020
Alex Wilhelm, a senior editor at TechCrunch, shared his reasoning on the stock market of SaaS. Translation: Sergei Dragun.
Friday, may 21, shares of companies developing SaaS solutions reached a record level. It’s the next day after the economy lost 2.4 million jobs, and the total number due to
COVID-19 decreased by almost 40 million Now we can understand how investors assess a SaaS company.
Assessment of public SaaS companies affect the valuation of private companies. Even if the SaaS market is falling or is experiencing unrest, it does not affect the valuation of start-UPS in this segment.
Record the value of the stock looks strange. Meritech Capital earlier this week wrote that “we are now at a historic peak of public evaluations of SaaS in the midst of a global pandemic”.
But do not think that these estimates are based on companies that promise more growth. As stated in the same report Meritech: “In General, the prospects of these companies since February, not much has changed for
with the exception of net profit for the first quarter, when in almost all cases, the user waving the yellow flag of caution for investors and refused or lowered forecast.”
There are some warning signs that growth will slow down, as noted by Jaml ball in Redpoint:
“35 of 38 Saas companies with the end of the March quarter exceeded expectations of revenue (and 1 of 3 that were not Eventbright). Today 2 SaaS company reported that first quarter ended no
one surpassed expectations. Covid has started to show its influence”.
Let’s talk about why this is all happening.
Investors want to participate in the growth and companies are struggling to grow. Therefore, capital flows from other stock in shares of IT companies, many of which are SaaS. This trend
Money is worth nothing and investors are looking for any place to make a profit. Thus, the more capital away from things safe and flowing to where can I find some Bang. In
Digital transformation is now going on with great speed. This acceleration makes investors worry about what might happen later. So SaaS stocks are rising.
“This morning I spent 30 minutes chatting with CEO of Splunk, Doug Merritton. Everything went pretty well. Scrolling through the statement of income of his company, I asked him about that, does
digital transformation is more rapid migration to cloud services and as a consequence the increase in the shares of SaaS companies? He agreed,” writes Alex.
That’s what propels shares rally SaaS, increasing their rating to comical levels.
SaaS, assessment of the company’s shares, IT-market