There’s gold in all those nontech industries!
As the tech sector continues to digest a new reality, one that sees a slowdown in both investment and company valuations, software earnings are more important than ever. This is especially true as many software companies have fiscal calendars that end on January 31st each year, meaning they report their results later than other companies. This means there’s some lag when it comes to sorting out how many of the most important public comps for startups are performing.
Welcome back, Alex! Anna was out this weekend, but we expect her return in short order. Thank-you to her for letting me write today’s Exchange newsletter. It’s great to be back and I can’t wait to get started!
Often, when it comes to analyzing tea leaves, public-market data and private-market companies can be difficult to relate back to each other. While the public markets are much easier to track and understand in broad strokes, the private markets often offer more intimate insights into individual companies. For this reason, one of the key determinants of whether or not a company is worth investing in comes down to its future prospects – something that can be difficult to assess with certainty from a solely public-market perspective.
The week of October 2nd was a good one for technology stocks. Salesforce, beleaguered by external criticism concerning its cost structure and investor pressure regarding its growth rate, bested expectations in its trailing results and projected greater profitability. Okta was another standout reporter from the week, beating expectations and putting up guidance that investors liked. The stock market as a whole showed signs of stability as well, with the S&P 500 posting modest gains on the news. All in all it was an encouraging week for those invested in these types of stocks.