My concern is that introducing valuation and anchoring to one or another presumed floor within a bottom up analysis of tech does not work because it assumes that traditional valuation metrics and DCF suffice.
Until late 2021, SaaS rode a confluence of monetary, tech, and business trends to the moon. While the secular trend in cloud remained, monetary and business backdrops went into cyclical corrections that made our heads spin.
This is why the thread below is so painful to revisit now:
We all proved it so very convincingly that tech was cheap in Jan 2022!
If monetary conditions are the wave, then there is no bottom until we hit traditional ranges like 1-2 P/S. Or ceiling, until everyone and their cat is invested in SaaS.
So the interesting question is whether in highly volatile moments a company or two get mis-priced, which is not supposed to happen, but it does temporarily as with ZS in the 80s. So this is where the amazing strength of this forum lay, I think. But that determination would come from putting together reasonably expected future company business performance relative to price and sentiment and sure, valuation contraction, but not by measuring against a fixed valuation “floor.” And what would invalidate that analysis regardless of its quality with respect to company and sector is a paradigm shift in underlying monetary conditions.
No worries, done with this topic on my end:)
Cheers