Thread by @jaminball

Bifurcation of software multiples as seen on a scatter plot (multiple vs growth). Historically all software has traded within red circle. Now a separate group has broken out. Is it warranted? After Q4 earnings, I believe we'll see more separation of contenders from pretenders

Here's the scatter plot without the circles

Here's the same scatter plot from late October, right around the peak for the ETF WCLD (this ETF is a good proxy for cloud software). As you can see, there wasn't nearly the same amount of separation. More of a continuum. This was less than 3 months ago, before this correction

And to make an earlier tweet more clear - my views are any companies currently in the blue circle (contenders) that don't deliver near perfect Q4 results will get knocked down to the red circle (pretenders)