Dear readers,
Just last week, I commented here on the capitulation of one of Europe’s best-known value investors and expressed the hope that the end of the AI hype on the stock markets and a return to genuine corporate value might not be all that far off.
Today, I feel vindicated in my continued optimism. A good example of this trend is the SpaceX stock, which found its way into the portfolios of countless retail investors just five weeks ago following its IPO. Before the weekend, the stock fell below its IPO price of $135 for the first time and has lost nearly 40% of the peak prices it reached in the days following its initial listing.
Things are likely to get extremely interesting around SpaceX in the coming weeks. SpaceX will report its quarterly earnings in early August, and in the days following that, pre-IPO shareholders will have their first chance to cash out. If investors do return to focusing on real corporate value, this will very likely trigger another drop in the stock price. But perhaps Elon Musk will pull another rabbit out of his hat and, with a compelling narrative (e.g., a planned merger with Tesla), prevent the seemingly inevitable - we’ll see. It will indeed take a compelling narrative, because a 40% correction alone is, of course, no reason to hope for an imminent price recovery given SpaceX’s exorbitant valuation.
Netflix shareholders have just learned this the hard way. The Netflix stock was a favorite among many small investors for years and was consistently traded at high valuation multiples before it corrected sharply in the wake of the failed Warner takeover. Following a solid - but by no means thrilling - quarterly report, Netflix stock plunged another 10% at the end of last week and has now lost almost half its value over the past 12 months. Netflix is a first-class company in which I’d be happy to invest at the right price. But the stock - with a cash flow multiple above 20 - is still too expensive for my taste, given the declining growth outlook. In other words:
Valuation Matters!
As a growth investor grounded in value investing principles, last week’s developments confirm to me that this principle still holds true. In fact, we may be witnessing the beginning of a shift in market favorites. While the hyped chip and AI infrastructure stocks have recently suffered massive declines, the software and platform stocks that had fallen sharply in the first half of the year have rebounded significantly.
Overall, my investable sample portfolio gained two percent last week, for example, while the Nasdaq 100 Index lost four percent and the previously hyped SOX semiconductor index lost a full ten percent.
The latest addition to my portfolio, HubSpot, has gained over 20 percent since I bought it four weeks ago. My other SaaS favorites - UiPath, Monday, and Elastic - have also rebounded by 15 to 20 percent during this period. Whether this recovery in SaaS stocks - which, in my opinion, had fallen far too sharply - will continue or even accelerate will depend on their quarterly earnings reports due in the coming weeks.
Of course, one good week doesn’t signal a trend reversal, but for us value investors, there’s certainly reason to be optimistic about a strong second half of the year. And that’s good news after the dismal first half of 2026.
People Stock: From a Holding Company Discount to a Casino Bet
The investment case for People Inc. has fundamentally changed. Until now, People Inc., formerly IAC Holding, was a relatively straightforward "sum-of-the-parts" story. However, Barry Diller now wants to acquire a majority stake in the much larger MGM Resorts Group, thereby transforming People into one of the world’s largest hotel and casino holding companies. Here is my updated assessment of the new opportunity/risk profile...
Zoom Stock: Is It Time for Me to Buy Back In?
Three years after the end of the pandemic, the former COVID-19 star has evolved into a highly profitable cash flow machine with AI potential. Zoom’s early pre-IPO investment in Anthropic also provides a sort of safety net for the valuation. But is that enough for me to buy back in?
Airbnb Stock: Will Airbnb Become a Travel Super App?
It seems that Brian Chesky, the CEO of Airbnb, read my article from a year ago about Airbnb. At that time, I suggested that rental cars and boutique hotels would be logical additions. Now, these offerings are finally coming to the Airbnb app. The next step could be a partnership — or even a merger — with Lyft. Here’s my latest update on the Airbnb stock in my portfolio...
HubSpot Stock: Ready for a Comeback After SaaSMageddon?
Successful contrarian investing requires not only experience but, above all, a strong conviction in a stock. The best way to develop this conviction is through in-depth knowledge of the company and a clear investment case. In the following, I’d like to share my current assessment of HubSpot. The market has been a bit too quick to label the company as a supposed AI loser.
UiPath After Q1 FY27: Is the Comeback for the AI Age Finally Underway?
Following Q1, the investment case for UiPath is becoming increasingly clear. If Agentic Automation leads to sustained growth acceleration, UiPath stock is clearly undervalued. Otherwise, UiPath remains a profitable enterprise software stock with substantial share buybacks and high net liquidity.
monday Stock After Q1 2026: Strong Results, but Not a Breakthrough Yet
One example of a SaaS stock in my portfolio that has fallen far too low is monday. Although the stock has already rebounded by 40% since April, it is still trading 70% lower than it was a year ago. Investors are treating this profitable growth story as if it were that of a dying legacy software company.
Thank you for your interest! If you would like to support my work, please forward this free newsletter to friends or acquaintances who are interested in investing in tech and growth stocks.
Best,
Stefan Waldhauser
Disclaimer: This newsletter is an expression of opinion and does not constitute investment advice. Please note the legal information.