Author: Howard Lindzon
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We’re off to a bit of a rocky start to the new year in software and cloud stocks.
Here is the chart of the software ETF $IGV -in an 18 percent pullback, the worst since March 2020.
That is why I called up my friend Jeff Richards to help make sense of it all. This episode marks Jeff’s fourth visit on Panic with Friends since we started in March of 2020. I asked Jeff to help me frame the selloff, fundamentals versus valuations and the big picture as we come 70, 80, 90 percent, whatever it is, out of COVID for better or worse.
You can listen to the podcast here on Spotify or Apple podcast and now all the episodes are on my YouTube channel as well.
You can also listen right here on the blog:
Below are more details about Jeff and the podcast, as well as links to his previous podcasts. Many of the stocks he has discussed in past appearances have been incredible performers so it is worth going back and listening to these as well.
Guest: Jeff Richards
Profile: Managing Partner at GGV Capital
Where to Find Him: LinkedIn, Twitter
What’s Jeff Panicked About?: Health.
Previous Appearances:
Jeff Richards, Venture Capitalist on Panic and Opportunity (EP.4) (March 2020)
Jeff Richards of GGV Capital on the inevitability of Nasdaq @10000 (EP.76) (June 2020)
The Takeaway:
There’s never been more capital, there’s never been more tools to speculate with, there’s never been more platforms to discuss speculation on, there’s never been more time. Put all these together and fundamentals just don’t matter. Until they matter. Right now we’ve got major software and cloud players down thirty to forty percent over the last six to nine months. But in the long run we are going to see a massive tailwind of revenue and cash flow and profits from these companies. And prices now don’t seem correlated with earnings, nobody’s missed big on earnings; this seems to be a re-rating of sector based multiples, which could happen with interest rates, geopolitical conditions, and possibly healthcare. It’s a good time to go nibbling on names that you love. Take a look at a few of the fallen IPOs for ideas as well.
Favorite Quote:
“It’s a great time to be a founder. It’s a great time to be a founder with an idea and be able to raise capital. The trick is to be a founder that can then execute and live up to the expectations.”