What do you think of investing in saa stocks? How do we value them? Can these stocks be valued by value investing methods?

Hi Phyllis, we have articles on understanding and analysing SaaS and tech stocks on SeedlyReads.

You can check them out under these links: https://blog.seedly.sg/analyse-software-as-a-se... and https://blog.seedly.sg/how-to-pick-the-best-tec....

Hope the articles help you.

Generally for SAAS stocks, it is very hard to value them using traditional value investing methods, because these companies are generally loss making as they are reinvesting into sales anfd marketing to grab market share. However, that being said, the recurring revenue must be growing , and one should use metrics to valuate them in comparison to companies in the similar industry. Generally there should be incumbents that are being disrupted. Compairng P/S would be one way, and using metrics could be one way too, by looking at Dollar based net retention rate, LTV/CAC etc to check if the business is growing well.