Steve Eisman, the investor made famous by “The Big Short,” compared the current enterprise software selloff to the financial sector during the 2008 crisis on his podcast this week.
The difference: nothing has actually broken yet.
“I’ve never seen a group that literally goes down when they report good numbers, when they report bad numbers, and then when they report any numbers,” he said.
Valuations Cut In Half
Baird software analyst Rob Oliver told Eisman the average price-to-sales multiple across his coverage has fallen from roughly 6.5x to 3.5x next-12-month revenues. For the first time in memory, the group trades at a deep discount to the S&P 500.
Salesforce (NYSE:CRM) sits around $174, down over 50% from its December 2024 all-time high near $364, trading at roughly 12 times free cash flow.
Adobe (NASDAQ:ADBE) has dropped to about 9 times free cash flow.
ServiceNow (NYSE:NOW) reported 21% Q4 revenue growth, watched the stock drop 10% on the print, …
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