The market sell-off is is crushing cloud stocks.
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Salesforce had its worst day since February 2016, plunging 8.7 percent on Monday to $121.01, leading a swoon in shares of companies that sell subscription software. Workday fell 7.6 percent, ServiceNow dropped 8.4 percent and Atlassian fell 8.7 percent.
A number of cloud stocks plummeted more than 10 percent, including Okta, Coupa, Everbridge, Five9, HubSpot, Shopify, Tableau, Twilio and Zendesk. The sector has been hot this year, spurred by big acquisitions, IPOs and a general shift in spending from desktop software to the cloud.
There was no obvious catalyst to Monday’s slide, with earnings season behind us and businesses thinning out ahead of the Thanksgiving holiday. But the broader market decline is having an outsized impact on technology. Facebook continues to drop on unfavorable news regarding abuse of its platform and Apple slid after the Wall Street Journal reported the company has cut production orders for new iPhones.
Joe Terranova, chief market strategist with Virtus Investment Partners, told CNBC on Monday that concerns around economic growth are hurting tech companies.
“You’re not seeing what you saw at the beginning of this year,” Terranova said. “Whereas you saw a significant enterprise spend on software, on services — that’s dissipating.”
The Dow Jones Industrial Average and S&P 500 both fell more than 1.5 percent, while the tech-heavy Nasdaq lost 3 percent, and is now 13 percent below its high reached in August.
Even after the cloud slide that began in late September, Salesforce is still up 18 percent for the year, while Twilio is up more than 200 percent.