![]() ![]() ![]() The company occupies an interesting niche. In the meanwhile, the company has continued to sustain growth at well in excess of 30% and it is likely that the company can sustain that cadence more or less for some years to come. There really never was an ASC 606 play to be had, and in the last four months, the shares have decreased by about 53%. Zuora is a fairly recent IPO that initially was embraced by investors and bid up to unsustainable levels in the wake of expectations that it would be an "ASC 606" play. Zuora is one of the latter vendors that is likely to mitigate the impact of any growth slowdown.īut regardless of my views on the macro environment, there are stocks whose implosion has brought them to a value level that should be of some interest to some readers. Short of an economic calamity, the fact is that many of the IT solutions being sold by the newer IT vendors - including Zuora ( NYSE: ZUO ) - either facilitate a substantial competitive requirement or have provide buyers with a major improvement in process. Indeed the exact opposite is the case where the ROI of most IT solutions is exceptionally high and the competitive value of IT is exceptionally strong. The issue of shelfware - a major factor in the 2000-01 tech wreck - is not in evidence. the requirement for more approvals, the lengthening of sales cycles, excessive discounting have not yet appeared. And so far as it goes, the classic signs of an IT buying pause, i.e. Their ability to buy IT and their need to do so hasn't changed. Financial institutions - that buy lots of IT solutions - have not seen any liquidity issues. And I will certainly further suggest to readers that this market slide is not like that of 2007-8 or the tech crash of 2000-1. I will suggest that there is no real sign that demand for IT solutions has slowed. I am not going to write much further with regards to macro considerations. Will the Fed wind up in undoing its latest policy pronouncement? I do not know, and I have no way of knowing. While most rational folks would dial back the hyperbole, the decision of the Fed last week, as well as its seeming inability to collectively go beyond the unemployment rate in considering the best way of achieving its dual mandates, does seem troublesome. Clearly market participants believe that "tight money" is strangling the economy - and certainly the point of view that current interest rates are above a neutral stance can be readily supported, especially in light of the run-off of Fed balance sheet assets. I am not going to attempt to figure out when the bounce will come - other than to opine that it will. There are just so many casualties or good bargains, depending on one's point of view. There hasn't been any place to hide in tech, and no real place to hide outside of tech either. Which name should I look at now that almost all IT/technology names have suffered simply amazing haircuts in a short period of time? I get that question a lot from my subscribers and from friends and colleagues. Zuora's Natural Split Makes It Easy to Digest
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