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That's not the right read. Public software companies prices are way off outside FAANG.

• gunapologist99 5y ago
  Why is that? What does not being FAANG have to do with it? Are we talking about older public software companies like Oracle, Adobe, Microsoft, etc, or are we talking about newer ones or even ancillary (not-directly "software" companies) like Docusign?
  • danielmarkbruce 5y ago
    Because people are selling...To me it seems that the FAANG stocks weren't actually overpriced. Many of the other software companies seemed overpriced to me. But any strong sounding narrative as to why is going to be.. incomplete. Someone else will say inflation and interest rates. Someone else will say something else. All you know is people are selling. It's pretty much across the board... Salesforce, Veeva, Datadog, Blend, New Relic, Okta, Zoom, ServiceNow, Twilio, Atlassian, Docusign and on and on and on. Most of them off 40% from the highs.
    • ttunguz 5y ago
      there's been a rotation out of technology because of the prospect of interest rates going up. because most technology companies don't generate earnings (profits) for many years, and because many investors use DCF (discounted cash flow calculations) to value a company. the greater the interest rate, the lower the value for these business. that's why it's a broad sell-off.
      • danielmarkbruce 5y ago
        It's a nice, coherent narrative. It sits so nicely in a human brain. It's incomplete. Several companies had big earnings misses. Docusign is the obvious example. Twilio missed. Zoom. Big drops. Anytime you have a really coherent narrative in the stock market, you are missing something.
• xwdv 5y ago
  They always will be though. It is unreasonable to expect that software companies are always going to be fairly priced at maybe 1x or 5x multiples. Shares will get bought up fast and the price will rise.
  • danielmarkbruce 5y ago
    They will always be what? Going down? I was just saying they've come way down.
  • ttunguz 5y ago
    15 years ago they were priced at 5x and it's gone up to 15x then up to 55x then to 80x and now back down!
• sokoloff 5y ago
  A 52% correction in price would be a dire situation indeed. A 52% correction in multiple feels like a semblance of sanity is returning.
  • danielmarkbruce 5y ago
    Many of them are off 40% or more. This index: https://www.spglobal.com/spdji/en/indices/equity/sp-software-services-select-industry-index/#overview https://www.spglobal.com/spdji/en/indices/equity/sp-software... is off nearly 30%.
    • sokoloff 5y ago
      Said differently, the price has crashed all the way back to a level not seen since just 13 months ago. That sounds “not dire” to me.
      • danielmarkbruce 5y ago
        It's probably not dire. It doesn't change the fact that the price has dropped meaningfully, it's not just multiples contracting while revenues go up.
        • sokoloff 5y ago
          I don’t believe I claimed the price was unchanged.
          • halpert 5y ago
            You implied the price change wasn’t massive, but it was. This is what you said: > A 52% correction in price would be a dire situation indeed. A 52% correction in multiple feels like a semblance of sanity is returning.
      • ttunguz 5y ago
        I agree. It's not there. In fact, we've seen something like five of these corrections in the last 10 years. https://www.tomtunguz.com/five-corrections-saas/ https://www.tomtunguz.com/five-corrections-saas/