Are Cloud Stocks Really Recession-Proof?
It's hard to find a bigger set of winners on the stock market in recent weeks than cloud-computing stocks.
The software-as-a-service (SaaS) sector has surged since the market bottom with many names touching all-time highs, including Shopify (NYSE: SHOP), Okta (NASDAQ: OKTA), Twilio (NYSE: TWLO), and MongoDB (NASDAQ: MDB). In some cases, cloud companies are benefiting from specific trends related to the pandemic. The work-from-home movement has lifted shares of Slack (NYSE: WORK) and Zoom Video Communications (NASDAQ: ZM) as those companies provide tools like online chat boards and videoconferencing that help enable remote work. Similarly, Shopify has capitalized on the shift to e-commerce with so many stores closed during the shutdown period.
Valuations in the sector were already looking stretched before the pandemic hit, and though many of these companies posted strong results in the first quarter, the pandemic's impact didn't start until March. Now, there are already some warning signs that the pandemic and the recession it's causing may have a greater impact than expected.
Source Fool.com
