Today’s technology markets look similar to the Y2K stock bubble over two decades ago. The pandemic fast-forwarded customer spending for cloud solutions. Now that the pandemic is at an end, led by governments ending lockdowns and masks, three cloud stocks are down sharply.
Snowflake (SNOW), a stock that Warren Buffett owns, posted a GAAP EPS loss of 43 cents in Q4/2021. Revenue rose by 101.6% Y/Y to $383.77 million. For Q1, product revenue will grow by 79% to 81% yet the operating loss margin will be 2%. For 2022, expects revenue of up to $1.9 billion. SNOW stock is too expensive. Momentum investors are closing the trade.
Okta (OKTA), which investors bought for its Aut0 acquisition, is now selling cybersecurity stocks. Okta posted revenue growing by 63.2% Y/Y to $383 million. It lost 18 cents a share (non-GAAP). For Q1/2022, revenue will grow by 55% Y/Y. It will still lose up to 35 cents a share. For FY 2022, Okta will post revenue of up to $1.79 billion. Non-GAAP net loss a share will be $1.24 – $1.27.
Database firm DataDog (DDOG) is also fading on the markets. The stock fell alongside Okta’s drop. Cautious investors should wait for the selling panic to end before considering any of those three stocks.