Price actions on ZS, ESTC, and DOCU

Investment Analysis Clubs Saul’s Investing Discussions
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What is the market telling us? Is the market no longer favor SaaS stocks? Apparently not.

  1. The selloff in the last few days was not limited to SaaS stocks only, almost all momentum stocks got hit hard. It appears to be a somehow triggered, broad, profit-taking action by fund managers - rotating money out of those old darlings to buy some of the previously heavily beaten down names (such as chips and Chinese stocks)? Maybe.

  2. ESTC’s price action today seems to indicate that the market still favors SaaS stocks. ESTC is also another stock that is closely followed on this board. Many of us still hold it - I sold out mine the last runup prior to the Earnings release, at about today’s closing price. The earnings were great, but the price shot up for just one day, and then dropped to ~ $80. ESTC is up by >10% today. And it is now has a similar P/S to AYX, higher than ZS.

  3. Also Docu, another stock previously followed by many on this board. Its price has gone up to the north of $60, after the releasing of one good ER.

Sure, ZS did not meet the sky-high expectations. But it surely does not deserve such brutal treatment. But that is the stock market. Overreaction both ways. However, ZS’s price will not stay this low for long. Give it 3 months, it may shoot up again - all it needed is a good ER.

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