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COVID’s Impact On Cloud Software Stocks

October 9, 2020 | software | No Comments

This is an update to the article “Playing Defense with Cloud Software Stocks” published on May 27th, 2020

Rebound numbers from Q3 will look spectacular following the paralyzing effects of strict shelter-in-place orders in Q2. The economy is officially in a recession after posting two negative quarters of GDP growth at (5%) in Q1 and (32%) GDP in Q2. The latest estimate from Atlanta’s Fed GDPNow for Q3 2020 is showing a record rebound of 35.3%.

This represents an increase of 7.9% quarter-over-quarter and 3.1% below the pre-recession high. For comparison purposes, the Financial Crisis of 2008 bottomed at 4.0% below its pre-recession during the third and fourth quarters of its recession.

The chart above shows the projected Q3 rebound of 35.3% from the Atlanta Fed’s GDP Now released on October 6

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