This week, the price of cloud stocks plunged by 11%, the biggest decline since January, as management exits from Five9 and Zscaler and investors’ persistent flight from risk caused the group to reach its lowest level since March 2020.
More than twice as much as the S&P 500, the WisdomTree Cloud Computing Fund, a collection of 75 cloud computing equities, has lost 53% of its value for the year. Due to worries about inflation and rising interest rates, the industry has fallen out of favour in 2022 after booming in 2020 and 2021 when Wall Street pushed into growth at the expense of earnings.

Following CEO Rowan Trollope’s announcement that he was leaving Five9 to lead a pre-IPO firm, the stock experienced the largest weekly decrease in the index, plunging 29%. Even though the call centre software supplier also released third-quarter revenue in advance, indicating that results would be stronger than anticipated, the figures weren’t strong enough to outweigh the uncertainty brought on by a change in the C-suite.
Mike Burkland, who stepped down as CEO in 2017 after being given a cancer diagnosis, is taking over for Trollope, who has held the position of CEO since 2018.

In a report released on October 13 by Piper Sandler analysts, they stated, “Interest level in the name remains high, but confidence is rattled by both developments and the absence of clarification from Five9 until the earnings call next month.” The company continues to rate the stock as a buy.
One of the group’s top executives wasn’t just lost by Five9. Amit Sinha, the president of security software provider Zscaler, has announced his departure. He will now serve as the CEO of a startup that is getting ready to go public. For the week, the stock fell 21%.

Although it’s never (or very rarely) considered positive news when a C-level executive leaves a company, analysts at Guggenheim recommend purchasing the stock because they believe this change won’t have an impact on Zscaler’s short- or long-term prospects. Additionally, they believe Mr. Sinha will benefit from the opportunity.
The markets had a generally bumpy week, which was culminated by a selloff on Friday. The Federal Reserve is probably keeping a close eye on rising inflation expectations, according to a consumer poll from the University of Michigan. Since growth businesses are more vulnerable to interest rate increases, the Nasdaq led falls.

All five days this week saw declines for the WisdomTree index, with Friday seeing the biggest decline of 3.6%. Even though there was no specific news to blame for the decline, SentinelOne, a company that sells cybersecurity software, fell 22%. Developers’ code repository GitLab fell 21%. Both SentinelOne and GitLab went public in high-profile IPOs last year. This year, they have all lost more than half of their worth.