Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Volatility! The rockiness for cloud software stocks continues. All eyes were on the FOMC this week. More guidance around what the market should expect with regard to bond buying and rates for next year would influence how cloud software stocks (often high growth) will preform. The result? We should expect 3 rate hikes in 2022, and another 3 rate hikes in 2023. Additionally, the pace of taper will be doubled to $30B / month. Overall this was viewed as hawkish (rising interest rates to fight rising inflation). At the same time, real rates (nominal rates - inflation) rose quite a bit (nominal rates up, inflation expectations coming down). The most simplistic interpretation of this - growth asset prices should come down (rising rates = lower growth asset prices). This is precisely what we say on Thursday. Just about every cloud software company was down (some big) on Thursday. Overall on the year the median YTD
NET continues to be a very bloated outlier. I have a substantial short position using put options.
"When looking at overall median cloud software multiples - we are still 12% above pre-covid highs, 35% above where we were on Jan 1, 2020, and 10% above the previous peak in August 2019. However, if you remove companies that went public during the pandemic, the overall median is right back to where we were pre-covid."
My question: what does high growth software median look like if you remove these?
You have a few mistakes in the first paragraph. FYI
High growth software median being 76% above pre-covid is compared to high growth of then or overall median software of then?