A number of stocks fell in the afternoon session after a hotter-than-expected wholesale inflation report revived concerns about persistent inflation and tempered hopes for a Federal Reserve interest rate cut. The Producer Price Index (PPI) for July jumped 3.3% from a year earlier, surprising economists who had forecasted a 2.5% rate. This data revived concerns about persistent inflation and forced traders to reconsider the likelihood of a near-term interest rate cut by the Federal Reserve. High-growth technology stocks, which dominate the SaaS landscape, are particularly sensitive to interest rate fluctuations.
Restaurant software platform Toast (NYSE:TOST) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 24.8% year on year to $1.55 billion. Its non-GAAP profit of $0.25 per share was 12% above analysts’ consensus estimates.
Growth boosts valuation multiples, but it doesn’t always last forever.
Companies that cannot maintain it are often penalized with large declines in market value, a lesson ingrained in investors who lost money in tech stocks during 2022.
Toast Inc. (TOST) aligns with Louis Navellier’s growth strategy, showing strong earnings beats, rising revenue, and improving margins. A high-growth pick for momentum investors.
Software is eating the world, and virtually no business is left untouched by it. This secular theme makes SaaS companies attractive investment candidates but also comes with higher valuations that cause volatility.
Unfortunately, the rich prices have haunted them over the past six months as the industry has shed 7.4%. This performance is a noticeable divergence from the S&P 500’s 5.3% return.
Shares of restaurant software platform Toast (NYSE:TOST)
fell 4.6% in the afternoon session after the company reported second-quarter results that missed analyst expectations on profitability, even while it surpassed revenue forecasts. The restaurant technology provider's earnings per share came in at $0.13, which fell short of the $0.22 that analysts anticipated. While the company added a record 8,500 new locations and raised its full-year outlook, investors focused on the earnings miss and potential future headwinds. Management pointed to increased investments and the impact of tariffs, which were expected to reduce profit margins later in the year. This outlook for tighter margins appeared to overshadow the strong revenue growth and record customer additions.
Restaurant software platform Toast (NYSE:TOST) announced better-than-expected revenue in Q2 CY2025, with sales up 24.8% year on year to $1.55 billion. Its GAAP profit of $0.13 per share was 22.8% above analysts’ consensus estimates.
A number of stocks jumped in the afternoon session after the Software as a Service (SaaS) sector rebounded following the sell-off in the previous trading session as a weaker-than-expected U.S. jobs report increased the probability of a Federal Reserve interest rate cut. The July Nonfarm Payrolls (NFP) report showed the U.S. economy added only 73,000 jobs, significantly below the 110,000 forecast. This, combined with downward revisions for May and June, signaled a cooling labor market to investors. In response, market expectations for a September interest rate cut by the Federal Reserve surged from roughly 40% to over 80%. A potential rate cut is generally favorable for growth sectors like technology and SaaS, as lower rates can increase the present value of their future earnings, boosting stock valuations.
