The news on Monday that a COVID-19 vaccine candidate appears to be incredibly effective and has given investors reasons to believe in a better future. Maybe COVID-19 won't be with us for years, investors seemed to think, but it will instead become something we can bend the curve about sooner than we thought.
A strong vaccine would be the key to getting back to life as it was. And for many companies affected by the pandemic, the news that one would come was more than a shot in the arm: it was the salvation of the stock market. Stocks of airlines have soared. Cruise companies jumped. Even Boeing shares have long since taken off.
The Exchange explores startups, markets and money. Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.But amidst the cheering, a sector of the stock market, a key competition for a number of startups, was successful. Yes, the high-flying SaaS and cloud stocks that were such a key narrative in 2020 thanks to the pandemic and low interest rates, fell sharply as other industries bounced back from the vaccine news.
SaaS and cloud stocks are more off this morning, although their decline is less than Monday's losses.
We asked yesterday what signal public investors were looking to send with their trades. But this is only one corner of the image. So to better understand how private investors are seeing the same signs, I have reached out to some VCs investing in SaaS and in my experience, they are worth listening to.
Below I have compiled some notes from Mary D'Onofrio by Bessemer, Brianne Kimmel of Work Life Ventures, Masha Drokova of Day One Ventures, Iris Choi of Floodgate is Jacob Mullins of Shasta on our question.
Are the bulls still bullish? Let's find out.
SaaS, vaccines and the future of work
D'Onofrio wrote that his company was still digesting the vaccine news and that it was "too early to say firmly whether or not people will return to a pre-COVID life in the coming quarters." It's right. Some good news about vaccines doesn't mean I'll be speeding up United Economy Plus across the country every two weeks in April.
That said, D'Onofrio doesn't seem too worried about the selloff earlier this week, noting that SaaS and cloud stocks, measured via his company's cloud index, are still far ahead of other broader indices this year. Because it's important? "Stocks look to the future," she said, telling her "that even with increased visibility on the return to" normal, "the market expects [market expansion] and growth opportunities that COVID has helped to promote ".
"The pie", he concluded, "has expanded". It's bullish and fair, I think.
