Customers & Innovation as Share Price Determinants of The Cloud's New Cornerstone

Sammanfattning: This paper examines the effect of revenue, customer acquisition cost, research and development expenses, and earnings per share on the share price movements of SaaS companies listed on the New York Stock Exchange or Nasdaq. Additionally, the report explores if the metrics explanatory power varies between large SaaS companies (market capitalization > 10 billion USD) and mid- and small-cap companies (market capitalization < 10 billion USD). Revenue has a significant impact on the share price movement of SaaS companies, as demonstrated by panel data regression analysis. This is almost certainly due to investors' appreciation for the SaaS business model's ability to retain and attract customers in a highly competitive environment. Customer acquisition cost ratio is a valuable metric for valuing SaaS businesses because it captures sales and marketing efficiency, critical in fast-growing markets like SaaS. EPS is not a good proxy for share price movements in large-cap SaaS companies, which is most likely because stable, mature businesses are simpler to value, and thus stock markets do not react as strongly to earnings releases as they do to mid- and small-cap SaaS companies. R&D has a sizable impact on the share prices of mid- and small-cap SaaS companies. This is probably because smaller firms are more reliant on innovation success than large firms, and investors appear to factor R&D into stock price valuations based on future profit expectations.