Nevertheless, investors are rotating away from expensive tech stocks into cyclical stocks amid the economic recovery and this is driving cloud stocks to weak performances as well. This is evident in First Trust Cloud Computing ETF’s (SKYY) 1.9% loss over the past three months versus the SPDR S&P 500 ETF’s (SPY) 10.4% gains. Also, companies that offer cloud-based services face privacy and security concerns regarding data losses, data breaches, application vulnerabilities and online cyber-attacks.
With increasing competition in the cloud space, not all stocks are great buys. So, we think fundamentally weak cloud stocks Lightspeed POS Inc. (LSPD), Anaplan, Inc. (PLAN), and Appian Corporation (APPN) are best avoided now.