SaaS Stocks Down 12% So Far In 2008
The next time somebody tells you software as a service (SaaS) is a home-run opportunity, tell them to take a close look at MSPmentor’s SaaS 20 Stock Index, which tracks many of the world’s “leading” SaaS companies.
Since December 31, the index has fallen more than 12 percent, and at least four SaaS companies have seen their shares slide more than 30 percent this year. Here’s a bit more about the SaaS 20 Stock Index, and some of the trends it’s tracking.
Yes, SaaS is the wave of the future. We believe SaaS will increasingly meld with open source and managed services to create big opportunities for investors, customers and IT service providers.
But for every winner (like Salesforce.com shares, up more than 13 percent since Dec. 31), there are numerous losers and hard-luck stories. Salary.com (down nearly 62 percent), NetSuite (-46 percent), Taleo (-35%) and Omniture (-33%) have all declined sharply since the New Year, according to MSPmentor’s SaaS 20 Stock Index.
There’s no single explanation for the declines. Perhaps SaaS stocks were overvalued heading into 2008. And maybe we’ll see a rally as enterprise and midsize firms cut internal IT spending amid the economic slowdown, and more fully embrace SaaS.
Either way, I’m a long-term believer in the SaaS market. But MSPmentor’s SaaS 20 Stock Index will help us to gauge the actual performance of SaaS companies.
We’ll use the index to cut through the hype you’re hearing across the SaaS landscape. And we’ll measure the progress of traditional tech companies (like Dell and Intuit) that are pushing into SaaS.
We also have our eyes on some long-term goals. As MSP platform providers launch their own initial public offerings (IPOs), we’ll consider adding them to the SaaS 20 Stock Index.
I like the concept of your index and will follow it. I think SaaS stocks are down this year for the very reason you mention. They were over-valued heading into 2008. We’ve had a little bit of a correction but the long term saas outlook is very strong.
Ted: SaaS outlook certainly is strong. But the media and bloggers have to do a better job pointing out that individual SaaS companies may still struggle even as the broader SaaS market expands. The PC industry had hundreds of failures and a handful of really massive successes. So too will SaaS.