Source: Wall Street News
Entering 2022, as the Federal Reserve continues to aggressively “retract water”, U.S. stock technology companies usher in a dark year. Even the “darling” of the market in the past five years – cloud computing companies will not escape the disaster and be panicked by investment are selling aggressively.
Shares of unicorns smart payments platform $Bill.com (BILL.US)$ , digital lending platform $Blend Labs (BLND.US)$ and cybersecurity firm $SentinelOne (S.US)$ compared to late last year has shrunk by half.
But it is worth mentioning that the revenue of the above three companies in the first quarter doubled year-on-year, with an increase of 179%, 124% and 120% respectively.
Coincidentally, this embarrassment has also occurred in the restaurant industry payment technology company $Toast (TOST.US)$ , data analysis software maker $Snowflake (SNOW.US)$ , subscription management software $Zuo Rui (ZUO.US)$ and other companies body.
On Toast’s first-quarter earnings call, Treasurer Elena Gomez expected the company’s EBITDA in the second half of 2022 to be 2 percentage points higher than in the first half. But so far this year, Toast’s share price has also halved, now at $16.52 per share.
The contradiction between corporate valuation and performance is even more apparent on the index.
Byron Deeter, a partner at Bessemer Venture Partners, a well-known venture capital firm, pointed out that the revenue multiple (revenue multiple = company valuation / revenue) of the BVP Nasdaq Emerging Cloud Index, which aims to track the performance of cloud computing emerging public companies, has retreated to 2017 levels. Investors generally value tech companies, especially SaaS companies, using revenue multiples rather than free cash flow.
Taking SentinelOne as an example, although the company’s financial report was generally better than expected, analysts from investment agency BTIG lowered its target price to $48 per share due to the decline in revenue multiples.
Mary D’Onofrio, another analyst at Bessemer, said companies with free cash flow margins above 10% today also have higher revenue multiples as investors fear a recession . D’Onofrio said:
The market has turned cash is king.
In addition, the WisdomTree Cloud Computing Fund, which had a strong previous two years, has fallen 47% from its Nov. 9 peak . In the future, as the Federal Reserve continues to tighten monetary policy, the fund cannot escape the fate of continued decline.
Jason Lemkin, founder of B2B software service provider SaaStr, said that the cloud computing industry will take several months to shake off the downward pressure. become past tense. He says:
We are reverting to the mean.
Editor/Corrine
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