Software Stocks Lagging as Tech Breaks Out

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The S&P 500 has made several new all-time highs since in mid-May but the Nasdaq – 100 ($NDX.X) has not made a new high since April 2024. Part of the reason for the $NDX.X lag is the selloff across the enterprise software industry.

The Enterprise software industry offers software that automates business processes including payrolls, supply chain, compliance, accounting and even customer management. Enterprise companies are always expanding their reach within their customers business, programming new functionality within existing software and creating new business lines.

Some of the largest enterprise software companies have taken a shellacking over earnings, revenue and guidance issued in March, April, and May. Steep selloffs in enterprise software stocks may have kept Nasdaq from rising.

Revenue Misses and Lowered Guidance

Salesforce (CRM) earnings last week were the catalyst for a wider selloff in the enterprise software space. The firm beat earnings but fell short on revenue and gave lower than expected second quarter guidance. The stock sold off 20 percent in post earnings trade, sinking to $212 per share.

CRM Daily Chart with technical indicators and post earnings selloff

Palo Alto Networks (PANW) has been under pressure in the post – earnings environment. The company guided expectations lower for next quarter and full year revenue.

PANW Daily Chart with technical indicators and post-earnings selloff

Adobe (ADBE) opened nearly $71 lower on March 15 after also beating earnings and revenue targets in its March 14 earnings report. This enterprise software company also guided for lower revenue in the second quarter. ADBE will issue next earnings report on June 13.

ADBE Daily Chart with post earnings selloff and technical indicators

Intuit (INTU) a financial software company in the enterprise space, had better than expected earnings on May 23 but still sold off after lowering earnings guidance. The volume surge on the downside had the stock trading lower through its 200-day moving average.

INTU Daily Chart with post earnings selloff and technical indicators

The table below shows some of the largest enterprise software firms, their current price/earnings ratio, year-to-date stock performance and average daily options traded.

SymbolP/E RatioYTD Performance Options Volume
ORCL364%51,760
NOW78-2%13.585
PAYC25-21%2,146
WDAY34-22%18,389
CRM44-6%110,963
PANW451%69,562
ADBE37-26%32,127
INTU670%8,333
TradeStation Data

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Mary Slack is a Content Specialist at TradeStation Group. Drawing on over two decades of experience as an analyst, trader and journalist, her background includes equities, futures, FX, fixed income, and derivative markets. She previously worked at MCM, GFI and Thomson/Reuters working on financial products for FX and fixed income. She previously traded on the floor of the Chicago Board of trade in the bond options pit and has experience as a hedge fund trader focused on the financial sector. She was the bureau chief of an economic news agency based in Washington, D.C. that focused on economic data and market economics. She brings extensive options trading and analysis experience. Customers can expect her to write about stocks and stock options for TradeStation.