Pure-Play Cloud Computing SaaS Stocks Lagging Expectations
Image Source: Unsplash
An Introduction
The sell-off in the munKNEE Pure-Play Cloud Computing SaaS Stocks Portfolio continues, DOWN 6.4% MTD, DOWN 1.2% in just the past week, and now DOWN 15.0% YTD. Surprisingly, that weakness is despite the fact that the global cloud computing SaaS market is expected to experience a CAGR of 18.4% between now and 2032, according to Fortune Business Insights.
What is Cloud Computing?
Cloud computing (CC) is the technique of processing, storing, and managing data on a network of remote computers hosted on the internet rather than on a personal computer or local server. It is used by individuals for storing photos or documents, watching movies or listening to music on platforms like Netflix or Spotify and for companies to store information.
What is SaaS?
SaaS, also known as cloud application services, is the most commonly used service within the cloud market. SaaS platforms make software available to users over the internet, usually for a monthly subscription fee. They are typically ready-to-use and run from a users’ web browser, which allows businesses to skip any additional downloads or application installations. SaaS accounts for 38.5% of cloud computing revenue. (Source) Also, read Cloud Computing 101.
Image source: The Motley Fool
What is a Pure-Play Company?
A pure play company concentrates all its efforts on a single line of business and, as such, those companies that are highly diversified, i.e., do not generate at least 50% of their sales from cloud computing products and services, are excluded from the munKNEE Pure-Play Cloud Computing SaaS Stocks Portfolio.
Price-to-Sales Ratio
The price-to-sales (P/S) ratio, which equals a company's market capitalization divided by its annual revenue, is often used as a valuation metric for SaaS companies in place of the P/E ratio. A higher P/S ratio denotes optimism among investors that attractive revenue growth will continue and that the revenue will eventually generate profits.
The munKNEE Pure-Play Cloud Computing SaaS Stocks Portfolio
Below is a revised list of pure-play CC companies presented in descending order of their performances last week and YTD, their market capitalizations, their unique business model descriptions, their current price-to-sales ratio and their latest news, analyses and commentary where available.
- Zoom Video (ZM): UP 2.2% last week; DOWN 18.1% YTD
- Company Description: offers video, voice, chat, and content sharing through computers and also offers a cloud phone system
- Market Capitalization: $18B
- Current Price-to-Sales Ratio: 3.9 (Very Low - Poor)
- Most Recent News, Analyses, and Commentary:
- Dropbox (DBX): UP 1.9% last week; DOWN 21.6% YTD
- Company Description: provides a content collaboration platform worldwide that allows users to sign up for free and upgrade to a paid subscription plan for premium features
- Market Capitalization: $8B
- Current Price-to-Sales Ratio: 3.0 (Very Low - Poor)
- Most Recent News, Analyses, and Commentary:
- Twilio (TWLO): UP 1.3% last week; DOWN 22.7% YTD
- Company Description: provides various application programming interfaces and software solutions for communications between customers and end users
- Market Capitalization: $10B
- Current Price-to-Sales Ratio: 2.3 (Very Low - Poor)
- Most Recent News, Analyses, and Commentary:
- HubSpot (HUBS): UP 0.8% last week; DOWN 17.3% YTD
- Company Description: provides a cloud-based customer relationship management (CRM) platform for businesses
- Market Capitalization: $25B
- Current Price-to-Sales Ratio: 9.2
- Most Recent News, Analyses, and Commentary:
- MongoDB (MDB): DOWN 0.7% last week; DOWN 38.5% YTD
- Company Description: provides general-purpose database platforms worldwide and offers professional services comprising consulting and training
- Market Capitalization: $19B
- Current Price-to-Sales Ratio: 9.8
- Most Recent News, Analyses, and Commentary:
- ServiceNow (NOW): DOWN 1.0% last week; UP 6.3% YTD
- Company Description: provides end to-end intelligent workflow automation platform solutions for digital businesses
- Market Capitalization: $155B
- Current Price-to-Sales Ratio: 13.6 (Very High - Excellent)
- Most Recent News, Analyses, and Commentary:
- Workday (WDAY): DOWN 1.1% last week; DOWN 17.6% YTD
- Company Description: provides enterprise cloud applications to help its customers manage their business and operations
- Market Capitalization: $61B
- Current Price-to-Sales Ratio: 7.0
- Most Recent News, Analyses, and Commentary:
- Okta (OKTA): DOWN 2.1% last week; UP 3.9% YTD
- Company Description: offers products and services to manage and secure customer identities and a suite of security capabilities that protects customers from different types of malicious traffic
- Current Price-to-Sales Ratio: 6.0
- Market Capitalization: $16B
- Most Recent News, Analyses, and Commentary:
- Atlassian (TEAM): DOWN 2.7% last week; DOWN 25.8% YTD
- Company Description: designs, develops, licenses, and maintains various software products
- Market Capitalization: $46B
- Current Price-to-Sales Ratio: 9.2
- Most Recent News, Analyses, and Commentary:
- Snowflake (SNOW): DOWN 4.3% last week; DOWN 34.7% YTD
- Company Description: offers Data Cloud which enables customers to consolidate data into a single source to drive meaningful business insights, build data-driven applications, and share data and data products
- Market Capitalization: $44B
- Current Price-to-Sales Ratio: 12.5 (High - Excellent)
- Most Recent News, Analyses, and Commentary:
- Cloudflare (NET): DOWN 4.3% last week; DOWN 4.4% YTD
- Company Description: provides an integrated cloud-based security solution to secure a range of combination of platforms and offers website and application performance solutions
- Market Capitalization: $27B
- Current Price-to-Sales Ratio: 16.0 ( Very High - Excellent)
- Most Recent News, Analyses, and Commentary:
- Datadog (DDOG): DOWN 6.9% last week; DOWN 1.9% YTD
- Company Description: operates an observability and security platform for cloud applications
- Market Capitalization: $41B
- Current Price-to-Sales Ratio: 14.5 (Very High - Excellent)
- Most Recent News, Analyses, and Commentary:
Summary
The above 12 CC stocks were DOWN 1.2% last week, are DOWN 6.4% MTD and are DOWN 15.0% YTD and have an average market capitalization of $39B.
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Disclosure: None
This article has been composed with the exclusive application of the human intelligence (HI) of the author. No artificial intelligence (AI) technology has been deployed. ...
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