Adobe, Cloudflare lead plunge in cloud stocks after JPMorgan issues wave of down

[OZER]

JPMorgan analysts downgraded Adobe, Datadog, Cloudflare, Zscaler and other software stocks in an outlook report for 2022.
"With rates climbing, this adds risk to higher multiple software stocks trading over 20 times revenue," the analysts wrote.
Adobe fell almost 7%, Cloudflare tumbled 9% and Zscaler was off almost 8%.



Adobe's stock had its second-worst day of the year on Tuesday, and shares of other cloud software companies like Cloudflare and Zscaler plunged after JPMorgan analysts issued a series of downgrades, citing high valuations.

In a 2022 outlook report on software technology, JPMorgan analysts including Sterling Auty and Jackson Ader lowered their ratings on 13 companies, while upgrading just five.

"The reasons for the downgrades include a combination of limited upside to our price targets, valuation in light of risk that interest rates rise in 2022, adjusting discount rates for the current rate environment and reevaluating reasonable cash flow expectations," the analysts wrote.

The threat of rising rates in an environment of high inflation has been spooking tech investors for the past month.

The Federal Reserve, as part of its two-day meeting on monetary policy, is expected to announce a major policy change on Wednesday as the market anticipates a tapering of its bond-buying program before rate hikes begin. A CNBC Fed Survey predicts the central bank will raise rates three times in each of the next two years, starting in June 2022.

Higher rates tend to have an outsized impact on high-multiple tech companies because they eat into future cash flow projections, which is a key metric in valuing growth stocks.

"With rates climbing, this adds risk to higher multiple software stocks trading over 20 times revenue," the JPMorgan analysts wrote.

[Krivokid11]

Dishonest reporting

[flounder]

Dixon seems not ready for prime time. Missed several opportunities to hit home runs and instead grounds out. I suggest she practice more or they get someone in who excells at communication. With what is at stack now we cannot have amateurs representing us. I give Dixon a partisapation award

[neilwad]

It is not desirable for inflation to be stopped, or even slowed too much. The Central Bank's power are less and less as economies get bigger and bigger.  And despite what we are told there is a disconnect between government fiscal policy and the policy of the Central Banks.  CP is a poor metric, but one we have used for decades.

[moon_rocks]

for the vice president kamla haris only making india benifit ..india bought s-400 misale from russia but USA affraid sanction india..because they hiprotise whole USA gave their vice president,ceo,employee..that brings america suffer one day when american president or everything controll this indian..they lost their super power and lost india,russia,chaina.. so know thats time they should clearify this and should sanction india for s-400 missale bought..and also shouldn''t make any good position indian,chaina,israel people

[old_peculiar]

Inflation is real because the pandemic slowed consumption. The BBB can stifle inflation if given the chance.

[engdahl]

No. The US governemnt is in no place to afford any interest rate right now. The only way is for other countries to hyper inflate before us or eliminate all high risk junk bonds

[percussionist]

Future of the job market is going to require nothing less of a graduate degree? Plunge the future generations into more debt? Especially with student loans..GTFO. Ill just be a plumber and charge $80 an hour as a start.

[Bogeyman]

The bubble is transitory

[energumen]

Investing is the best option right now, seen the economy is bad  INTELLECTWEBSCM making money with those guys is the right time now

[meme5lol200]

Let's go Brandon

[AlsoJustice]

We should believe in  and wall street right and what they say? LOL wake tf up ppl

[demorocz]

Walmart across the board has raised prices. Most, if not all, sticker prices are old. New prices you find out at the register.

[Michael_Lee]

End the FED

[red_xephos12]

LOL when I hear the 2 % preferred rule... Have they ever done a good job of keeping that the average rate.. LOL! I think the average rate has been more closer to like 3 or 4% over the last 40 years, let me know if Im wrong. I like learning more than I like being right by a lot.