Wall Street’s powerful 2023 tech rebound has left a world of haves and have-nots: big tech companies that have recovered most or all of their steep losses from the year before, and a much larger group of smaller, once-hot stocks that have seen growth fizzle and are trading far below their peaks. Nowhere has that been more pronounced than in the cloud software industry.
The combined market value of the 70 companies in the Bessemer emerging cloud index — which includes names like Adobe, Salesforce and Zoom — soared from $1tr just before the pandemic to $2.7tr in November 2021. A combination of rock-bottom interest rates and strong digital demand, as customers were forced to buy online software and services to keep operating during the pandemic, sent so-called software as a service (or SaaS) companies into the stratosphere.
For some, the post-pandemic hangover has been brutal. The index shed nearly two-thirds of its value by the end of 2022, before a near-40 per cent bounce last year as some of the biggest names rebounded. But the sector’s combined market cap is still $1.1tr down from the peak, with the losses heavily concentrated among smaller companies.