A few minutes ago, BobbyBe said: Three stocks in Saul’s portfolio trade for P/S ratios of more than 30 - Datadog, Zoom, and Crowdstrike.
That’s wrong by a lot. CRWD is at a PS of 23.7. That’s pretty important, because we’re not talking about a small difference here. And this makes today’s price on CRWD even more confounding.
Here’s what I think is happening
CRWD’s usual volume is about 2.7 million shares per day. Monday (when the lockup expired) they hit another digit, and volume was 13,807,010, so more than 5 times the usual. Yesterday it was only a couple times the usual volume, 5,760,528 shares. Today it’s up again – more than 3.6 million already, and the market has only been open for about an hour. So it seems pretty clear to me that there are more sellers than buyers right now.
Who’s buying and who’s selling?
It also seems likely that the sellers are those who got in before IPO, and are now taking profits. That just makes sense with the lockup timing. So who’s buying? Well, not momentum traders – the price has been falling. Fund managers? Maybe some…although year end activities may have some distracted. My guess is that people like us are the main buyers. Those of us who understand the fundamentals to some extent. And I don’t want to pick on anyone, but obviously even many of us haven’t stopped to calculate the actual valuation! CRWD is now cheaper than OKTA by PS ratio! And growing revenue twice as fast!
PS ratios
AYX 20.7
SMAR 20.8
CRWD 23.7
DDOG 32.7
ZM 34.1
If I’m right, we’re seeing a pretty massive opportunity here. If I’m wrong, there might be something really wrong with CRWD. But with the information I have, I just don’t see it pointing toward any problems, other than a market imbalance. When and how does that change? Greed will have to win out over fear.
Wow, shame on me for that mistake! I took the data from finviz. I’ve been using the 10k statements more and more for my calculations, but now I see its important to never take anything at face value if it comes from a third party!
As Saul says, always always always always always always always always always always always always always always always always always always always always always always always always get your data from the company itself.
Internet aggregators like finviz can be helpful, but never take them at face value – only a starting point. Their data can often be old, or simply make assumptions that don’t hold universally. Lastly, I’ve never seen even one that gets share count right consistently.
I am concerned about why all these SaaS stocks are struggling when nothing much has changed. Last year it was similar near year end. Tax covering perhaps?
There is a Fed Reserve conference today which could cause uncertainty in the overall market, but that should not have a bigger impact on SaaS vs other stocks.
can you try and figure out why AYX is getting crushed today?
Well, they’re having their Raymond James Technology Investors Conference event. It started at 11:55 eastern, but the price dropped before that. Profit taking?
I agree Bear. The only thing that makes sense on AYX is that investors are locking in end of the year profits. Institutions hold a lot of AYX. Schwab says 87% institutional ownership. So end of the year locking in profits, would be my guess.
Mike
