Software stocks give up even more ground – TechCrunch
Quick blog here to update you on some pretty big moves in the market. Today, in a bad day for stocks in general, stocks of software and cloud companies took a hit.
In numerical terms, the Nasdaq Composite lost 2.51%, according to CNBC data. It’s a very bad day for a huge critical category of publicly traded wealth. And then the Bessemer Cloud Index, our preferred method for tracking a more targeted basket of modern software issues, fell 5.45% in regular trades.
That’s a lot of value removed in a single day. But because the declines come after the critical index for startups had already suffered steep declines recently, it was insult to injury. Here is the graph:
You need to glean two things from this collection of graphed data:
- Software stocks have returned more than all of their late-2020 gains and are down more than 30% from recent highs. It’s pretty bad.
- Software stocks remain highly valued and worth far more than they were at the start of 2020, about two years ago. It’s rather good.
So things aren’t great, but not terrible either, for modern freeware vendors.
The issue TechCrunch continues to track is how quickly, if at all, the declines noted above are beginning to trickle down to startup valuations. We are seeing cuts in the private-public market divide, where IPOs and direct listings attempt to transport companies from shore to shore. But in terms of simple fundraising momentum for startups, you wouldn’t know that earnings multiples are taking a huge cut in the public markets. For most startups, these are still heady days.