r/stockmarket
Salesforce down 30% in 14 straight red days at 10.5x forward earnings. The software massacre has gone completely detached from fundamentals. What is anyone actually doing here?
CRM and software stocks are crashing despite strong fundamentals due to historic liquidity rotation into semis, causing a huge disconnect.
- CRM is a dominant, profitable enterprise software company generating massive free cash flow.
- Trading at a low 10.5x forward earnings multiple, resembling a declining business despite strong fundamentals.
- Recent news flow for SaaS has been more bullish than bearish, indicating the sell-off is irrational.
- Historic liquidity rotation is aggressively pulling capital out of software and funneling it into semis.
- The market is indiscriminately selling all software names, failing to distinguish between high quality and garbage.
- Extreme market breadth issues with a tiny cluster of tech and semis dragging indices up while 80% of the market bleeds.
Salesforce is now down roughly 30% in the last 14 trading days. 10.5x forward earnings. 14 straight red days. Lowest levels in $CRM since January 2023.
Let that sink in. One of the most dominant enterprise software companies on the planet, profitable, generating massive free cash flow, trading at a multiple you'd normally see on a declining business and it's been red for 14 sessions straight.
This has gone past frustrating into genuinely absurd. Software collapses every single day while semis keep ripping into euphoria that has now exceeded the dotcom bubble. That's not hyperbole. The magnitude of the semiconductor run has surpassed what we saw in 1999-2000. Meanwhile most software names are down 25-35% in three weeks for no identifiable reason. And here's the part that makes it indefensible: there has been more bullish than bearish news flow for SaaS over the past month, and the sector still got torched.
What is actually happening is a liquidity rotation of historic proportions. Capital is being pulled out of entire sectors and funneled into memory and semis. Value plays some genuinely bad, some genuinely strong are being annihilated identically regardless of fundamentals. The market has stopped distinguishing between quality and garbage in the software space. Everything gets sold the same way.
It's like the market treats semis dropping for more than two days as illegal. Nonstop up for about a year. Every dip bought instantly. Every rotation feeds the same handful of names. And the breadth underneath it is some of the worst in market history. A tiny cluster of tech, semis, and AI names dragging the indices to record highs while the other 80% of the market quietly bleeds out.
Meta and Microsoft are both down nearly 20% in about three weeks. On what news? There is no fundamental catalyst that justifies two of the largest, most profitable companies on earth collapsing like that. These aren't speculative names. These are the literal pillars of the index, and they're being treated like falling knives.
Here's the honest part I'm struggling with. Every bear thesis on software has basically been allowed to run unchecked, and the stocks have priced in catastrophe. The AI disruption fear, the seat-based-to-agentic pricing shift, the renewal risk. Those are real debates. But the stocks are now pricing in something close to terminal decline for businesses that are still growing organically at double digits with net revenue retention above 110%. That's not a bear case anymore. That's the market pricing in a death that the fundamentals don't support.
And I'll be blunt about the emotional side too, because I think a lot of people here are feeling it. I'm jealous. Watching low-quality semi and AI names pump hundreds of percent like outright scams while people get filthy rich, while I sit on strong-fundamental companies that have been nuked for a year, is genuinely demoralizing. I own AI names too I'm not anti-tech. But I don't own the garbage that's tripling, and watching the garbage win while quality gets destroyed is its own special kind of pain.
So the real question I'm wrestling with: how does the software and value narrative ever turn around from here? Every bearish possibility has essentially been "proven right" by price action even when the fundamentals say otherwise. It feels impossible to reverse at this point. We might not be in one giant bubble. We might be in dozens of individual bubbles in specific semi and AI names, with moves that will never be repeated by any company in such a compressed timeframe, while everything else sits in a stealth bear market.
It feels like fundamentals simply don't matter anymore in these sectors. It's a massive dump every single day and that is not an exaggeration. Yes, some companies deserve to die and will. But strong businesses are being dragged down in the same sectors for completely unjustifiable reasons, purely because of what bucket they sit in.
And selling here feels brain-dead. Dumping what feels like the bottom to chase overvalued names that have already run hundreds of percent is the textbook way to lock in the worst of both sides. But holding while it bleeds another 5% a day every day tests your conviction in a way nothing else does.
So I'm genuinely asking the people here: what are you actually doing right now? Is anyone buying the beaten-down quality names? Is anyone sitting on their hands? I've already deployed my cash. Hundreds of dips across dozens of companies over a year makes it impossible to keep dry powder available, which is its own lesson about averaging down too early in a specific sector falling market.
This feels like the most illogical, irrational, fundamentally-detached market I've ever participated in. For those of you with real experience through 2000, 2008, 2020. Have you actually seen anything this ridiculous? Because from where I'm sitting, it's only tech, semis, and AI carrying the entire index while everything else gets quietly executed, and the breadth is the worst I've ever seen.
What's genuinely the play here? This is slowly driving me insane. Nonstop decline every single day on zero news is far from normal price action. I own individual stocks. I expect volatility, I've made peace with that. I genuinely don't care if a selloff is macro-related, if it makes sense in a broad market decline, or if there's any actual catalyst that justifies it. I can stomach pain that has a reason.
But this is none of those things. It's a third of the market cap gone in dozens of names in under a month with no explanation. Companies worth tens and hundreds of billions of dollars are moving like meme coins. 5% down today, 4% down tomorrow, day after day, with nothing behind it. That's what makes it impossible to process. There's no thesis to react to, no event to weigh, just relentless mechanical bleeding. How do you even position around something that has no logic to it?
Are you really comparing software companies, with global reach, making double digit growth, at 70% gross margins TODAY, with Blockbuster in 2004 when the company was stagnant for years and revenue was dropping? Just buy an ETF bro.
IMO, we're in a similar situation as before the GFC... Some people see the writing on the wall, but no one cares. Now it's a matter of how long can the market stay irrational. There are so many warning lights on the dashboard, but here are my favorites :
-80 yr old politicians telling us this is the future and invest public money in it(NEVER ends well)
-The most regarded, unprofitable, provably stupid ideas get floated around, and people clap their hands. Things such as orbital datacenters, or mini-datacenters bolted to house walls
TOTALLY a bubble. Remind the saying that goes "if your taxi driver talks to you about some stock, it's overbought, sell it right now ?" Well, now we're at the point where between rides, your Uber driver is yoloing his entire net worth with micron 0dte options on Robinhood.
Jesus, can't believe how far I had to scroll for someone to share a sane take. I guess i'm expecting too much from a popular sub.
This is so real and true it hurts. it seems investors are desperate for higher returns since the Mag7 are all taking a dump so they’re just piling into the highly leveraged, heavily debt-laden hyperscaler growth stocks with absolutely no concern for fundamentals
And it’s the exact same thing with Workday.
Good luck jumping ship from that.
Intel is a particularly interesting case. I was looking at it not too long ago, when it was 20$... I couldn't believe the amount of hate accross social media, it was like the unanimous opinion was that it was a shit company with shit product, and going to zero. I mean, historically if you were in the market for a CPU, it was either AMD or Intel... And sometimes AMD had some better price/performance deals for gaming, but Intel ALWAYS had the best CPUs. Now, AMD currently has bested Intel on their latest generation, but will that last forever ? Besides, Intel still wins on single core performance. Apple somehow managed to beat Intel on their latest processors, which is interesting, but irrelevant to most people on this planet cause they're not on IOS.
Intel also always had the best Wi-Fi modules, bar none, and as far as I know this is still the case. At a time when more and more stuff has Wi-Fi connectivity.
Intel also is unprofitable right now cause they're massively investing to produce next-gen products on US soil. Which is a big gamble, but it also could pay off massively. Didn't they reserve all of the machines that ASML will make this year, or something like that ?
Then Intel went up 6x on basically no new information... Crazy stuff. Like at some point people realized Intel was still making chips, which are the current theme, and it doesn't matter what they are or who makes them.
The $30 trillion question at the center of all of this: how is any of this supposed to create the kind of sustainable market needed to justify these valuations if nobody believes in any of the companies footing the CapEx bill?
That's the question I've been asking myself for years now... The answer I usually get is something like ''it can't be a bubble, the hardware sales are real''. Then I go ''that's precisely a bubble if the hardware is bought to perform unprofitable tasks''.
The funniest part is the schizophrenic disconnect between the whole ''short software long hardware'' theme. Look at how Palantir dropped hard from June 1st, exactly at the same time as the IGV etf. That eTF contains currently hated names such as SalesForce and ServiceNow, but also Palantir. And love them or hate them, Palantir's entire business is based on leveraging AI to increase productivity in large organizations... Youy know, the whole thing that people hope is going to justify the AI capex spending. THEY ARE DOING EXACTLY THAT, and they get shorted like they were some dinosaur legacy firm selling fax machine firmware.
I know PLTR still has a high valuation, just mentioning how the market recently seems to be lumping them will any and all other software companies.
Another funny example is MSTR. Most of their business is now their bitcoin accumulation strategy, but they are included in the IGV index as a software company. And the crazy thing is their software actually leverages AI tools. So anyone shorting the index is also shorting this company which actually makes money with AI, which should be the reason behing going long semis in the first place... The idea that the hardware will be in demand because at some point people will make money off it. And by shorting the index, you are also getting short bitcoin exposure, which should be a different conversation altogether.
blames the whole thing on Direxion's double/triple leverage long and short ETFs.
I pretty much doubt this is the root cause of the problem, as these are mostly retail products. Traditional wisdom says retail rarely moves the needle that much. And I suspect many people are using these for convenience, instead of options. As in, the volume you see there would probably be in the derivatives market instead if these ETFs didn't exist.
My gut feeling is the big players know a wall is coming, but the incentives aren't there to kill the hype train. Aside from SpaceX and the 2 insane IPOs coming, I think Google and others also raised massive amounts of money... Could be they know winter is coming, but they all think they can survive just fine if they can fill the coffers enough before it hits.
I used to sell ERP software and there's just nooo way this gets replaced by anything AI coded.
Even if it's just due to trust issues
AI companies that sell to each other in circles? Up 50x.
how about adobe? I bought a decent amount recently
I feel the same way about Service now being hyped up like crazy. It's is such a bad platform and doesn't have anything proprietary but they said they're working on agentic AI and people start pumping.
They would also need to keep updating it, have customer support at hand, liability issues etc. I’m sure some companies will make their own but hardly all. SaaS companies also have a lot of data that can’t be replicated very easily. If they can train AIs with this data specifically it does seem like a decent enough moat to keep competitors at bay to some extent at least.
Not going to lie. I this SaaS is fucking dead in the next 5. Maybe core, complex systems of record no. But building your own salesforce is 100% feasible for large corporations. Let’s not even talk about one-off niche tools like Anaplan, etc.
Picos y Palas ENFOQUE
Literally 30 sec read is intolerable for most people now 🤣
You're missing the big picture which is that Salesforce charges a ton of money to companies for a CRM to manage leads and a sales pipeline. Mark my words, this will be the first enterprise vibe coded app. Mid size companies that pay $1m/year for this will dump salesforce for cheaper options, and their AI isn't impressive enough to keep clients on the cutting edge. I work in the industry and have 30+ yrs of experience in enterprise software.
The stock market knows more than all of us combined. The tape is telling you some tiny real, I'm short IGV.