With the remote work arrangements expected to continue, a heightened adoption of cloud platforms is expected to enable the software-as-a-service (SaaS) industry to grow considerably. However, not all stocks are well-positioned to grow in the crowded industry. So, we think popular SaaS stocks Twilio (NYSE:TWLO), Okta (NASDAQ:OKTA), and Fastly (NYSE:FSLY) are best avoided now, given their bleak growth prospects. Let’s discuss.The demand for cloud-based applications, which facilitate remote working, has grown significantly, especially since the beginning of the COVID-19 pandemic. And amid the rapid, ongoing, global digitization, the need for software-as-a-service (SaaS) solutions is expected to be accelerated further. According to a Research and Market report, the global software-as-a-service (SaaS) market is expected to reach $436.90 billion in 2025, growing at a 12.5% CAGR.
However, as the SaaS industry grows, the risk of being exposed to cyber threats is a growing concern. Organizations are often subject to cyberattacks because they have crucial data on the cloud, which is under threat from malware and ransomware. Furthermore, the SaaS space also seems crowded, with several companies vying for a market share in the growing industry.
Against this backdrop, we think it could be wise to avoid fundamentally weak popular SaaS stocks Twilio Inc. (TWLO), Okta, Inc. (OKTA), and Fastly, Inc. (FSLY). Their prices appear to have gotten ahead of their intrinsic values and we think the companies have bleak growth prospects.