Covid has created an environment unlike the world before, and some companies are suffering from it, or experiencing Headwinds. Others are thriving in/despite this, and even experiencing Tailwinds.
Here I looked at some board favorites and a few others, and classified them based on whether or not their stock price is up or down vs February highs. I will discuss a few below.
All prices are approximate…I did this by hand so excuse any roughness.
**Experiencing Headwinds?** Stock Feb High Curr Price Diff PLAN 63 44 -30% PINS 25 18 -28% AYX 158 132 -16% **Experiencing Tailwinds?** Stock Feb High Curr Price Diff ZM 107 163 +52% CRWD 66 80 +21% SHOP 545 765 +40% FSLY 25 38 +52% NET 22 29 +32% WORK 28 32 +14% COUP 173 215 +24% DDOG 50 68 +36% OKTA 140 177 +26% (Most we follow fall into this category. I could have added DOCU, TWLO, MDB, etc etc. But I feel I have included enough.) **Headwinds? Tailwinds? Neither? Both?** Stock Feb High Curr Price Diff SMAR 52 56 + 8% ROKU 138 133 - 4% TTD 315 315 0% ESTC 73 73 0%
Why haven’t CRWD and WORK gone up as other stocks who are experiencing tailwinds? Obviously that’s too complicated to know. Perhaps the market saw them as already expensive (though I don’t see it that was based on growth rates and PS ratios). Perhaps the market doesn’t think they will thrive as much as others in this new environment (but I do). It is interesting to ponder if they will run further, as some others have.
I think ESTC should be experiencing tailwinds. If so, they could be bid up significantly from here. They will report their Q in a few weeks, and that will likely be the catalyst.
AYX is down on slower revenue growth, which makes sense to me. But it’s only down 16%, and it had a higher PS ratio in February. To me this is the market saying it still believes.
PINS is down more, but as I’ve said, I get it: https://discussion.fool.com/i-feel-like-it-has-been-well-known-t…
PLAN is an interesting one. I really don’t follow it, but it seems SaaSy ™ enough to thrive. They’ll report their Q on May 26. If anyone following them would like to write up their thoughts and post them, I’m all ears.
A lot of things are getting extremely expensive. And I’m talking market caps. Today DDOG became a $22 billion company. They have $424 million in TTM revenue. That’s a PS ratio over 50! SHOP’s is similar, and its revenue is only growing half as fast as DDOG’s.
Many others sport PS ratios in the 30’s and 40’s. My explanation: The market is desperate for companies that can thrive in this environment. We cannot know to what extent it will eventually go, so I’m not making a call about that…or about when this run-up will end for any of these companies. I have no idea. But there is a run-up happening. Many PS ratios are at all time highs by a lot.
I highlight CRWD and WORK, ESTC and PLAN, not because they’re cheap but because I think perhaps they share some traits with those that have run up more, and yet they haven’t had their run-ups yet. Maybe they never will…it’s just how the numbers look to me.
I also own AYX (why wouldn’t I?) and ZM. ZM is especially interesting because it’s beyond expensive…but it could be justified because their revenue is about to spike massively. We just have no idea how much.
Hope this was thought provoking.