Daniel Dines, CEO, UiPath at company’s IPO at the New York Stock Exchange, April 21, 2021.
Source: NYSE
Cloud stocks rallied on Thursday, with more than a dozen vendors notching gains of 10% or more, as investors used an upbeat day on Wall Street to snap up shares of companies that have been beaten down the most in this year’s selloff.
UiPath, a provider of software for automating office tasks, led the charge, surging 17%. The company late Wednesday reported a narrower-than-expected loss for the first quarter, while revenue topped estimates. UiPath raised its revenue guidance for the full year, also surpassing analysts’ expectations.
Daniel Dines, UiPath’s CEO, started off the company’s earnings call by acknowledging the tough economic conditions that have pulled down valuations in 2022.
“Choppy macro environments typically reveal areas that can be improved,” Dines said. “To that end, the team is focused on simplifying our go-to-market approach, starting with an alignment that will result in better market segmentation, higher sales productivity and best-in-class customer experience and outcomes.”
Even after Thursday’s pop, UiPath has lost more than half its value this year. The WisdomTree Cloud Computing Fund, a basket of 76 cloud stocks, jumped 6.5% on Thursday for its fourth-best day of the year, but it’s still down 38% in 2022.
At a time when the markets are particularly volatile because of uncertainty around interest rates, inflation and the war in Ukraine, companies with high growth rates but little to no profit are out of favor with investors, who are hunting for the safest assets. The narrative has completely flipped from the past two years, when outsized growth was celebrated even at the expense of earnings.
Because cloud stocks have sold off so dramatically this year, tech bulls are looking for every opportunity to call the bottom and get in at a discount. Forward revenue multiples for the basket of cloud stocks have contracted on average to about 8 from around 15 in September, according to Bessemer Venture Partners, whose cloud index forms the basis of the WisdomTree fund.
The rebound on Thursday occurred despite Microsoft’s announcement that it was trimming quarterly guidance due to an unfavorable impact from foreign exchange rates.
In addition to UiPath, the top performers in the cloud group included Elastic, which helps companies embed search in their apps, and analytics company DataDog, climbing 19% and 13%, respectively. Asana, Veeva and GitLab all rose by at least 14%. Other notable double-digit percentage gainers were Okta, Monday.com and Shopify. Those companies are still all down for the year between 25% (Veeva) and 71% (Shopify).
Elastic on Wednesday reported quarterly revenue that exceeded analysts’ estimates but called for a wider loss than expected for the new fiscal year. CEO Ashutosh Kulkarni told analysts that “strength in the demand environment continued.” It was the stock’s best day since the 2018 initial public offering.
Veeva, which sells software to hospitals and drug makers, was boosted on Thursday by a better-than-expected earnings report.
“We’re not seeing the macro effects in any particular segment,” CEO Peter Gassner said on the call.
ThredUp: “See, that’s the kind of stuff [that] used to work. An interesting growth clothing exchange. I’ve just go to tell you [it’s a no-go].”
Asana: “There are 72,000 collaborative software companies. 72,000. Now, OK, not really, but there’s a bunch, and I don’t want them. They’re not working.”
Greenbrier Companies: “I’ve always liked that company. That’s a company that makes things and does stuff that’s valuable, and we are short those [railcars]. We don’t have enough. I say [buy, buy, buy] because it’s down. It shouldn’t be down.”
Hillenbrand: “Business machines, products. Perfect. I like it. Always have. 12 times earnings. Makes things, does stuff. Dividend. Works.”
Herc Holdings: “No, be here because I think it’s going to be good. Same reason why I like United Rentals. I am a believer. It’s the same reason I like Nucor. … Stay with this one.”
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LONDON — Moving overseas might not seem like the most obvious thing to do during a pandemic, but for many people, Covid-19 provided the nudge they needed to take the plunge.
Around one in 10 readers of expat website InterNations said they had decided to move abroad as a result of the coronavirus pandemic, in its survey of more than 12,000 people online in January 2021.
Maria Eilersen is one of those who made the move. A PR coach and yoga teacher, she left London for Lisbon, Portugal, in November 2020, as cases of Covid were surging in the U.K.
Eilersen, who is Danish, had heard that the Portuguese capital was becoming a new hub for the international community post-Brexit. She also wanted to live somewhere with a sunnier climate than Britain. “It was very much, like, why not? We didn’t really do a whole lot of research — we were like, let’s just see what happens … and it was the best decision ever,” Eilersen told CNBC by video call.
Portugal came fifth in InterNations’ survey of the best places for expats in 2021, ranking highly in terms of quality of life, leisure options and affordability.
Eilersen and her Spanish partner used apartments they found on Airbnb to try out different areas of the city and eventually settled in Campo de Ourique, which they liked for its wide sidewalks and park where they could take their dog.
Workwise, Eilersen had already been coaching clients remotely via video through her consultancy Be Conscious PR, which helped make the transition to Lisbon seamless. “Whenever I talk to new clients … it actually just [helps] to inspire them and show them [that] you can really work from wherever,” she said.
Lisbon’s skyline, showing the city’s Ponte 25 de Abril spanning the river Tagus.
Stephen Knowles Photography | Moment | Getty Images
She also found yoga teaching work relatively easy to come by in Lisbon, after attending a class at a local studio and being invited by the owner to lead a session as a trial. Now, she teaches regularly. “It’s something I noticed happen once we moved to Lisbon … All these things that had been such a grind and such a hustle in London just happened really easily.”
Not everyone has had such a smooth ride, given pandemic restrictions and travel limitations, however.
Entrepreneur and former business analyst Anais Nesta moved from Lyon, France, to Boston, U.S., with her husband and two sons in February 2020, just a few weeks before shutdowns around the world.
“At that time, we were not fully aware of the extent of Covid-19. Quickly we found a home. We barely had time to buy a table and chairs as the shops and restaurants closed,” she told CNBC via email. The couple’s children could not attend school and the professional projects Nesta had been considering were put on hold.
“I had imagined expatriation scenarios, but it was far from the one we were going to live in. I learned that we were expecting our third child. We arrived in a country where we didn’t know anyone without having the opportunity to forge social bonds and discover our new host country,” she added.
Two years on, travel bans have been lifted and Nesta’s wider family have been introduced to the couple’s new daughter. After a tough start, she now feels lucky to live in “one of the most fascinating countries,” and the family have traveled to Louisiana and Florida as well as touring New England.
Nesta’s advice for those considering a move? “Go for it. Going abroad is a real accelerator for personal development.”
But she added: “If you are going as a couple and even more [so] with children, it is essential in my opinion to define, before leaving, the wishes of each [person].”
Before choosing Boston, Nesta and her husband separately listed their top five destinations, and then wrote down the pros and cons of the places they had in common, before analyzing the potential career opportunities in each city. Quebec ranked highly, but they chose Boston for her husband’s work, its reputation in the sciences and its location between the ocean and the mountains.
Planning your move
British expat Nina Hobson was living in Santiago, Chile, when the pandemic broke out and advises anyone thinking of living overseas for the first time to plan well.
She and her family are now back in her home county of Yorkshire in the U.K. and are planning their next move, to Punta del Este in Uruguay. “Take some time to reflect … Discuss the options with anyone else involved in the move, and really listen. For example, my husband and I set aside time at a café and agreed to just listen to each other in absolute silence so we could both really get our thoughts out in the open,” she told CNBC by email.
“I’d suggest making a plan, including saving enough money to get home if things turn sour. Again, keep the conversation with anyone involved in your move open. Listen to your partner and children. Make a plan but be prepared to tear up the plan if you need,” she added.
The city of Punta del Este in Uruguay.
ElOjoTorpe | Moment | Getty Images
Hobson is a life coach who also runs TheExpater.com, a blog for women abroad, and uses several apps and websites to manage her working life when she’s living overseas. “After being caught out through seasonal clock changes, I now use Time and Date Calculator to double check my work calls. I like Wise for organizing international [money] transfers fast and securely, and I rely on Slack, [workplace software] Asana and Zoom for my work,” she said.
When it comes to a workspace, she aims for a clean, tidy and light environment at home, and tries to separate the work day from later on, when work has finished. “Fold away the laptop, draw the curtains, light a candle, put the office notepad away,” she suggested. And, Hobson sticks to a routine. “My kids know that in the mornings I need to work and study, but in the afternoons I’m there for them,” she said.
Beachside paradise
The dream of a life by the ocean has come true for Natalie Levy, a former recruitment consultant based in New York City. She moved to Tulum, on Mexico’s Caribbean coast in August 2020, choosing it for its proximity to her family in the U.S., expat community and access to cities such as Cancun.
“It felt like an opportunity to live in paradise with conveniences,” she told CNBC by email.
Levy, who is now a business coach, says she earns more working for herself than she did in her former role, and adds that she has been “challenged” to slow down and have more patience if the electricity or internet connection is unreliable. ” I … recognize the privilege of working for myself so I can simply walk away from my computer when things go wrong and resume what I’m doing whenever I feel like it,” she added.
For Eilersen in Lisbon, moving has helped her to reset her attitude toward the “hustle culture” found in large cities. “Londoners boasted about working long hours and wore not having time to rest as a badge of honor … We need to let go of the belief that we only deserve success if it’s been earned through a lot of (unhealthy) hard work,” she told CNBC via email.
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Traders work on the floor at the New York Stock Exchange.
Brendan McDermid | Reuters
Technology stocks have been far from a sure bet since 2021 began its stretch run in mid-November. Inflationary concerns and fears of rising interest rates pushed investors out of software and internet companies, sending scores of prior outperformers into correction territory.
Despite the sell-off and the volatility across wide swaths of the tech industry, investors have made a bundle of money betting on specific companies and stories. Certain areas of the semiconductor market ballooned this year, as demand soared for processors that could speed crypto mining, aid game development and connect more devices to the internet.
Fintech, cloud software and cybersecurity had their share of standouts as well, even if buying baskets of those stocks and holding them for the year would not have been a particularly lucrative investment.
Here are the five biggest gainers in 2021 among U.S. tech companies valued at $5 billion or more. The list excludes companies that went public this year. Prices are as of Thursday’s close.
Upstart
When Upstart held its stock market debut in mid-December of last year, the company was valued at about $1.5 billion. Just over a year later, it’s a $12 billion company.
Upstart shares are up 264% since the beginning of 2021, including a gain of 171% over a wild three-day stretch in March.
The company uses machine learning to underwrite consumer loans and provides its technology to banking partners who can then better target customers.
Revenue in the third quarter soared 250% to $228 million. In addition to rapid growth, Upstart is giving investors something that’s unusual from a newly public tech company: profits. Upstart has generated earnings for five straight quarters, including net income of $29.1 million in the latest period, up from $9.7 million a year earlier.
Upstart said in its earnings call in November that it now provides technology services to 31 banks and credit unions, up from 10 a year ago. In the third quarter, the company powered 362,780 loans, up 244% from a year earlier.
Top tech stocks of 2021
CNBC
CEO David Girouard said on the call that the company is now moving beyond personal and auto loans and into small-dollar loans for consumers with “immediate cash needs.”
“Our bank partners rightly feel pressured to better serve low-to-moderate income Americans, and we want to help them do that right,” Girouard said. “The interest in the small dollar product from our bank and credit union partners is off the charts and we hope to bring it to market before the end of 2022.”
Synaptics
Synaptics was founded in 1986 and went public 16 years later. But it took until 2020 for investors to start getting excited about the stock. This year it took off, soaring 189%.
Synaptics grew up in the heart of Silicon Valley, developing touchpads and scroll pads for PCs as well as biometrics. Its touch technology then gained resonance with smartphones. Now, with more devices acting like computers, Synaptics has positioned itself at the center of the “Internet of Things” (IoT) boom.
The company’s technology can be found in connected cars, virtual reality headsets, set-top boxes, drones and gaming systems. It focuses on low-power consumption for all sorts of wireless devices.
“We’ve done really really well with that business — it’s outperformed our best expectations,” CEO Michael Hurlston told CNBC’s Jim Cramer in July. “I think it’s because we didn’t go after what everybody else was chasing. We repositioned it to go after an interesting market that has turned out to be a great grower.”
Earlier this month, Synaptics completed its $549 million acquisition of DSP Group, which provides voice processing and wireless chipsets.
Asana
Asana CEO Dustin Moskovitz
Asana
At its peak in mid-November, Asana was up almost five-fold for the year, far outpacing all other U.S. tech stocks. It’s lost almost half its value since then, falling alongside a bunch of other high-priced cloud software stocks.
Still, the provider of software that helps marketing, operations and sales teams manage projects and collaborate remotely is up 164% in 2021, driven by year-over-year revenue growth of at least 70% in the second and third quarters.
Like Upstart, Asana went public in 2020 but its coming-out party with investors took a few months to get rolling. Dustin Moskovitz, the company’s billionaire co-founder and CEO, has been buying along the way.
Moskovitz has purchased about $293 million worth of Asana shares in December, taking advantage of the dip to bolster his position. He now controls about 44% of the company’s Class A and Class B combined shares, up from 36% before the company’s New York Stock Exchange debut in September 2020.
Converting free users to paying customers is key to Asana’s future growth and profitability. In its third-quarter earnings report earlier this month, Asana said paying clients increased by 7,000 to over 114,000 and said revenue from customers spending more than $5,000 annually jumped 96% from a year earlier.
Fortinet
Fortinet Inc. headquarters in Sunnyvale, California.
Tony Avelar | Bloomberg | Getty Images
With two straight quarters of revenue growth above 30%, Fortinet is expanding at its fastest rate since 2016. A flurry of ransomware attacks along with a more complex security environment created by a sudden surge in remote work led to a spike in demand for Fortinet’s technology this year.
Shares are up 133%, closing on Thursday at $349.02. That’s lifted the company’s market cap past $57 billion, surpassing rival Palo Alto Networks, which is valued at $55 billion after its stock climbed 58% in 2021.
Following Fortinet’s better-than-expected earnings report and upbeat forecast last month, analysts at Wedbush increased their price target to $400 from $350. One reason, the firm cited, was the company’s free cash flow, which jumped to $329.8 million from $185.7 million a year earlier.
“In a nutshell, Billings growth upside, strong FCF, and a healthy pipeline should be the trifecta to drive this stock higher,” wrote the Wedbush analysts, who kept their buy recommendation on the stock.
Nvidia
Nvidia GeForce Now on iPhone
Nvidia
Chipmaker Nvidia was the best-performing mega-cap tech stock of the year. The shares soared 127% in 2021, pushing the company’s market cap to $741 billion, seventh highest among U.S. tech companies, behind the five Big Tech names and Tesla.
Revenue growth has topped 50% in each of the last five quarters, proving that Nvidia’s high-performance graphics processing units remain in hot demand. Within the data center, Nvidia’s technology bolsters artificial intelligence and data-intensive workloads, while gaming systems continue to require heftier processing power.
Earlier this year, Nvidia released new processors specifically for crypto mining. They’ve generated $526 million in revenue so far, but crypto is proving to be a volatile market for Nvidia. The company said last month that sales of the products plunged 60% sequentially from the second quarter to the third and are expected to be “very negligible” in the fourth quarter.
Investors aren’t expressing much concern. The stock climbed more than 8% after the earnings report, largely because gaming processors, Nvidia’s core business, generated $2.76 billion in revenue, an increase of 106% from last year.
“We continue to believe the company’s long-term prospects are some of the best in the semiconductor industry,” analysts from Piper Sandler wrote in a note after third-quarter earnings. They maintained their buy rating and raised their price target to $350 from $260.
WATCH: Nvidia could be a $10 trillion stock one day, says Jim Cramer
Penn National Gaming: “That stock has been crushed. it’s down more than 40%. I have to tell you, we’re in the height of the gambling season coming up. Penn Nat and DraftKings, they may go down later, but right now I think to sell them is a mistake. Whoa, they’re bad, but to sell them here is a mistake.”
GlaxoSmithKline: “GSK has got a 5% yield, is trying to bring out value. I think it’s doing OK. Not great. Not bad. I think it’s OK to own. Income is important.”
Asana: “I actually think that people are saying, ‘You know what, I think it’s too expensive versus Salesforce, and Salesforce just did OK. Let’s own Salesforce and not that one.’ That’s kind of been the way this market is working.”
Doximity: “I like Doximity. … Doctors love it. They communicate with it, and it does not stop going down. But again, this fits this pattern I’ve been talking about the whole show. We’re trying to find footing for these [kinds of stocks]. They’re very expensive stocks. We’re closer to a bottom than we were a week ago. I think Doximity is a buy here.”
TG Therapeutics: “[CEO] Mike Weiss has not been on since the stock was at like $4. … Biotech has found very little bottom here, but TG Therapeutics, actually nothing is really wrong. They’ve actually done OK. But they got some price target cuts. They made a couple of mistakes. Let’s get Mike on … and we’ll find out what’s going on.”
Plug Power: “It’s part of our [CNBC Next Generation 50 index]. Plug Power needs a better rate environment. It actually needs interest rates to go down for it to go higher, and we don’t have that right now. But I’m not going to tell you to sell Plug Power in the $30s. I think you can sell it in the $40s for a trade.”
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