Cloud Stocks Plummet Amid Wall Street Decline
Cloud computing stocks fell nearly 10 percent for the week ending Aug. 5, 2011, and those cloud computing stock declines continued today (August 8th), as credit downgrades and recession worries spread across Europe and the United States.
As of Aug. 5, our Talkin’ Clock Stock Index, which tracks 20 publicly held cloud computing companies, was essentially flat for 2011.
Big (Recent) Declines
Read between the lines, and you’ll notice that recent worries on Wall Street wiped out cloud computing stock gains from earlier this year. Indeed, the Talkin’ Cloud Stock Index was up nearly 20 percent in Q1 2011, though we warned multiple times that cloud computing valuations seemed awfully high, and we wondered if a cloud computing bubble had formed.
Despite the upbeat long-term prognosis, the short-term outlook remains volatile. Eleven of our 20 index members suffered declines of 10 percent or more for the week ending Aug. 8. A quick check of our index members show that shares are down across the board at least 5 percent again today.
Stocks began to fall sharply after Standard & Poor’s began downgrading various U.S. credit ratings. President Obama is expected to make a statement about the Wall Street situation today (Aug. 5) at 1:00 p.m. eastern.
Still, keep the bigger picture in mind: The vast majority of Talkin’ Cloud Stock Index members remain profitable and growing, as businesses of all sizes increasingly embrace cloud computing services to various capacities.
(Disclosure: I own shares in Rackspace and Red Hat, two Talkin’ Cloud 50 stock index members.)