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Clouded Judgement 1.16.25 - December Inflation

Clouded Judgement • 4 implied HN points • 17 Jan 25
💰 Finance Market Trends Economic data Investment Strategies Valuation Metrics Stock Analysis
  1. The stock market's current mood is cautious, as investors are eagerly waiting for important data about the economy. Strong data might mean higher interest rates could stay longer than expected.
  2. Recent inflation figures came in lower than expected, causing a positive reaction in the stock market, particularly with a significant rise in the Nasdaq index.
  3. SaaS companies are often valued based on their expected revenue growth. Despite some not being profitable now, their future growth potential can make them appealing to investors.

Clouded Judgement 8.4.23 - Cloud Giants Q2 Update

Clouded Judgement • 31 implied HN points • 04 Aug 23
💼 Business Cloud Computing Technology Trends Financial Analysis Market Performance Valuation Metrics
  1. Key cloud software companies like AWS, Azure, and Google Cloud are continuing to grow in Q2.
  2. AWS saw a growth rate of 12% in Q2, Azure at 27%, and Google Cloud at 28%.
  3. Valuation multiples for SaaS businesses are generally based on revenue, with median multiples varying based on growth rates.

Clouded Judgement 2.23.24 - Rule of X

Clouded Judgement • 15 implied HN points • 23 Feb 24
💰 Finance Market Analysis Valuation Metrics Company performance Investment Strategies Financial trends
  1. The importance of growth and profitability in the Rule of 40 for cloud software companies varies over time, with current public markets valuing growth 3.0x more than FCF margin in valuation multiples.
  2. 2024 guides from Q4 calls are not increasing consensus estimates, indicating companies are setting cautious expectations amidst market uncertainty.
  3. Valuation multiples for SaaS businesses are calculated based on their projected revenue, with growth, FCF margin, and NTM growth rate influencing stock valuations.

Clouded Judgement 11.29.24 - Big Tech Strength

Clouded Judgement • 3 implied HN points • 29 Nov 24
💰 Finance Investing Market Trends Tech Stocks Valuation Metrics Financial reports
  1. Big Tech companies showed mixed performance last week, with some like Amazon and Google doing well, while others like Nvidia and Tesla fell. It seems hard to predict a solid trend right now.
  2. Valuation for software companies often relies on revenue multiples, especially since many aren’t profitable yet. This helps investors compare companies within the same industry.
  3. Growth metrics matter a lot; high-growth software firms have higher valuations compared to slower-growing ones. This shows how investors are willing to pay more for potential future success.
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Clouded Judgement 3.8.24

Clouded Judgement • 6 implied HN points • 08 Mar 24
💰 Finance Guides Earnings Valuation Metrics Stock Performance Market Analysis
  1. Some 2024 company guides are below consensus, possibly indicating a conservative approach to set achievable targets.
  2. SaaS businesses value is often based on revenue multiples, considering future growth potential.
  3. Analyzing EV/NTM Rev Multiple versus NTM Rev Growth can show how cheap/expensive a stock is relative to growth expectations.

Bounceback in Multiples: The 2010 story

Musings on Markets • 0 implied HN points • 09 Jan 10
💰 Finance Investing Market Trends Risk management Economic Indicators Valuation Metrics Investing Market Trends Risk Assessment Economic Indicators Valuation
  1. Risk premiums have returned to pre-crisis levels, which has also led to an increase in stock multiples. This means investors are feeling less cautious now.
  2. The median Price Earnings (PE) ratio for US stocks improved significantly from its low point in 2009, showing a recovery in the market.
  3. The change in stock multiples is linked to investor risk appetite, and understanding this is key when deciding if a stock is cheap or expensive.

Data update for January 2009

Musings on Markets • 0 implied HN points • 20 Jan 09
💰 Finance Market Trends Risk Assessment Valuation Metrics Investment Strategies Corporate Finance Investing Market Analysis Risk management Corporate Finance Emerging Markets
  1. Equity risk premiums and default spreads dramatically increased in 2008, making companies worth about 40% less today than the year before, even if their earnings and ratings stay the same.
  2. During a crisis, emerging markets suffer the most, and risk premiums for these markets have also risen significantly, affected by higher premiums in developed markets.
  3. Although market multiples look cheap right now, the accounting numbers are outdated, meaning the full impact of the crisis isn’t reflected yet, and an update is expected in May 2009.