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it's been a brutal week for the cloud Kings the worst in recent memory well I know they might have further fall we have been conditioned to believe these software-as-a-service or SAS stocks are mostly immune to the slings and arrows of the business cycle we assume that their clients will keep paying up to migrate away from expensive on-premises software to the cheaper faster better cloud but now are you're in chatter that this great secular story is starting to let's say come to an end they're all start at work days analyst meeting on Tuesday CEO and Neil Bush Street friend of the show said we're definitely seeing some delays when it comes to the human capital business and the ladies are the last thing you want to see when you have a stock that's selling for a hundred times earnings so even though workday stock I don't really fallen from 226 at its highs over the summer to a hundred and eighty one right before the meeting the stock plummeted another 20 points next day you know since then it's falling another five bucks worse work they did a great job of spreading around the pain they told us that they want to get into the procurement business which is currently the domain of Cooper software a stock that was up 150% for this week no wonder coop has been clobbered from 160 down to 128 as of today why does work they want a piece of the procurement business the analysts who cover the stock hinted in various ways that it must be because their core human capital software business is slowly so they must enter a new vertical that kind of competition tends to terrify investors then there's the unthinkable happened sitting down graded Adobe that's right I mean they actually just downgraded it and Morgan Stanley and slash service now to us from a bottle home Adobe had already fallen from 3:13 to 279 but it was another 14 points since the Delray service now some from 303 to 274 but it's often another 31 bucks since the downgrade what was city's reasoning for the down rate they don't like the risk reward in Adobe and they think some of the company's digital commerce businesses may have weaker prospects than Wall Street please as for Morgan Stanley they condemned service now is too expensive given that the company needs to boost its R&D spending to stay ahead of the pack oh man these damn grace they were just so devastating well service now reports next week maybe it can rebut the presumption final blow oddly Marc Benioff the co-ceo of Salesforce is on a book tour for our trailblazer and somehow that resonated natively for Salesforce to stock some thought Benioff was too self-deprecating others questioned how he could spend time doing business and promoting his new book trailblazer so others didn't like what he had to say about regulation he called for Facebook to be broken up because in his eyes that it's too much power of the media now at first I didn't think any of the stuff matters I mean it seemed to padding especially since Salesforce reporting the best quarter of the group list just last early season but even these minor peccadilloes took the toll and because many ups one of the people who pioneered the software is a service concept anything negative about him tends to tarnish the whole industry as stupid as that is all these negatives have coalesced to trash the entire group leaving the cloud stocks in tatters and by the way it does not help one bit that there is aggressive aggressive insider selling in many of these stocks can Tekin Vance without the cloud it'll be tough I mean think on Wednesday IBM reporter a widely panned quarter that include verbiage claiming there's a slowdown in spending Enterprise spending from Germany in the UK to key markets for the software as a service base and by the way of course they're hurt by brexit or whatever now plus while there's been a break in new IPOs because we got so oversaturated once the deal start flowing back money managers may have to start selling these stocks again just to participate in the new offers heavy millstone so what could turn the cloud color around because you know we always liked the other side ins in on their money I think your best bet is Adobe they hold an analyst being on November 4th if CEO Shantanu Narayan raises his growth forecast it could ignite the entire sector which I believe is now heavily shorted barring that at some point bargain hunters will start coming into the group although it might take a halt oh wow because these stocks are hardly bargains when it comes to price earnings or price to sales this cloud sell-off feels different to me I think it's a signal with these companies more economically sensitive than we thought and they may be out of there long runways competitions coming so they're priced earnings multiples need to come down maybe we're in the third inning fourth inning no longer in the first inning for certain yet the clouds lost its luster you can still own one in case we get some kind of bounce look Machado trusts all in Salesforce but other than that these stocks are becoming a bit on the untouchable stock until we get stocks until we get something genuinely positive about software's or service companies and who knows when that will happen stick with C
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