Safe to say SaaSpocalypse was an overreaction where the baby was thrown out with the bath water.
Public SaaS stocks have rebounded and in some cases soared higher than before the Claude induced meltdown. Mr. Market has finally started differentiating software businesses based on their underlying characteristics: business model and growth.
The most stark contrast is how the market continues to penalize workflow, seat-priced companies like Monday, Hubspot or Asana. Though even these companies are on average back to 90% of their pre-crash levels. On the flip side, Mr. Market now realizes companies tied to infrastructure with transaction-based pricing will benefit from AI. Companies like Datadog and Twilio are up over 40% from their pre-crash highs.
You can also see discernment by growth cohort.
High-growth software (>22%) NTM multiples went from 12.4x → 10.4x → 17.2x. (39% above pre-crash levels)
Mid-growth software (15–22%) went 7.0x → 5.9x → 6.8x. (seven months later, still below pre-crash levels)
Was the February/March selloff an overreaction? Absolutely. Directionally, the market was right: AI is the biggest investable megatrend of our lifetime. You can see a little example in Salesforce. CRM was hit hard, down 44% top to bottom, but jumped 22.6% in a single day after reporting Agentforce ARR over $1.5B (whatever that actually means).
So what does all of this mean for you? As an investor, whenever you see a market sell off without differentiation, that’s an opportunity. As an employee at a SaaS company, don’t sweat the volatility. Just rebrand as an AI company and enjoy the ride.
Full slides (from Joseph Floyd’s comment)