Cloud software stocks have at most times in their relatively short history traded at valuation multiples beyond the ken of many mainstream investors. This causes such investors to stay away from these stocks. Hang around the bars, trading rooms and home offices occupied by said investors and you will hear mutterings of "valuation is crazy ... will all end in tears ... I'm not buying that". And upon any given market paroxysm du jour, or at least de l'annee, when cloud stocks tumble for a moment, those same investors can be heard to say "there - you see - told you so - it ended in tears". Whereupon they don't buy cloud stocks because, well, the vertiginous drop has proven that the valuations were lunacy in the first place. Only for cloud stocks to get back up, dust themselves off and resume their moon-shot trajectory. Still without those mainstream investors as shareholders.
Now, this doom loop happens because investors have been educated to believe that software stocks are different. Hard to understand. Risky. Could go bump in the night at any moment. In fact, the best cloud software companies are safe as houses, and any thoughtful investor can understand them. In this, Part 1 of our "Cloud 101" series, we begin our journey walking you through what good looks like in the cloud.