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T. Rowe Price Marks Down Most of Its Tech Startups
- baus 10y agoNo paywall. Same content: https://www.morningstar.com/news/dow-jones/TDJNDN_2016041510371/t-rowe-price-marks-down-most-of-its-tech-startups.html https://www.morningstar.com/news/dow-jones/TDJNDN_2016041510...
- Jerry2 10y agoThank you. I'm starting to loathe all these WSJ links on HN because their new paywall is impossible to break and I have no intention of paying WSJ subscription since I read only few articles per month.
- dotBen 10y agoGoogle the headline and click through from the SERP. Sometimes you need to do it from an incognito window if they set a cookie.
- LeoPanthera 10y agoOr click the "web" link under the post.
- retube 10y agoGoddam these people trying to earn money for their hard work!
- dang 10y agoOk, we changed to that from http://www.wsj.com/articles/t-rowe-price-marks-down-most-of-its-tech-startups-1460759094 http://www.wsj.com/articles/t-rowe-price-marks-down-most-of-....
- Diamons 10y agoAnd so it begins
- pcarolan 10y agoIf I were on the west coast, I would give no shits about east coast valuations. They lost that privilege when they marked mortgages wrong. Keep building rad tech, we'll keep buying it. Sales are all that matters.
- howlingfantods 10y agoCosts are important too... Valuations are generally based on both.
- jacalata 10y agoUnless you're trying to raise money, and then valuation by investors is suddenly important.
- toomuchtodo 10y agoAnd your sales aren't leading to profitability.
- pcarolan 10y agoMaybe, but what is the slope of the curve?
- pcarolan 10y agoOn the east coast they buy assets, in the midwest they buy sales, on the west coast they buy ideas. Valuation is subjective dependent on how you evaluate fpv. Risk quantification is not a science it is an art. Capital allocators are allowed to evaluate roi however they want my point is that the current trend of marking down companies isnt a sign of decreased value it is a signal of decreased risk appetite.
- golfer 10y agoI've never heard the regional "apetite" broken down like that before. But it feels right. I'd love to see some numbers/more data on this regional mindset.
- argonaut 10y agoThe problem is we've been getting these markdown stories every month for a year, now. At this point they seem pretty meaningless and arbitrary in terms of whether they signal an imminent crash. In other words, these stories are interesting, but about as valuable as a signal as the "imminent tech bubble crash" stories we've been getting every year since 2008.
- vasilipupkin 10y agowhat do you mean by an imminent crash? in some sense, widespread markdowns are a crash. Since public markets don't appear overvalued, it's a crash in private valuations and it's going on now.
- nxzero 10y agoIt's a popular opinion that a crash is possible, if not likely.
- lumpypua 10y agoWe've gotten so used to boom/bust cycles that we try to cram everything into that narrative, and anything that doesn't fit is disregarded as meaningless. This is what a functioning market adjusting inflated valuations down looks like.
- hkmurakami 10y agoAre there any tax benefits to such writedowns?
- deleted 10y ago[deleted]
- akg_67 10y agoIMO, these valuation write downs are not driven by the decline in the value of underlying assets but the lack of liquidity of positions in such assets. When the liquidity seized in high yield corporate bond market in Q4'15, it brought in to focus liquidity of all other asset classes. Most institutions dealing in assets that are not readily tradable are demanding higher discount for risk due to lower liquidity of such assets. This is resulting in lowering of fair market value for such assets. This is happening all across the alternative asset space and not just for private startups.
- TuringNYC 10y agoThere is always liquidity -- at a price. To give an extreme example...i'm standing ready to buy ANY startup at $1. Guaranteed liquidity. I note this because il-liquidity is usually an indication of a decline in value. It means there are smaller numbers of uninformed buyers out there to buy something at an inflated price.
- dia80 10y agoI think you mean any startup with a limited liability structure!
- hueving 10y ago'lack of liquidity' is just another way to describe the situation where there is no buyer at the price you want. I have an amateur painting that I really like and would not part with unless I was offered $1000 or more. However, nobody would actually pay that because it's not that great (it just has sentimental value to me). I don't pretend that the art market is just in a 'liquidity crunch' because I'm not able to sell it, I just recognize that the market value of the painting is much less than I'm willing to accept. People in finance like to use this phrase to describe unpleasant market pricing behavior to help justify the losses they would realize if they had to sell in the current market. "there was no housing crash, just a liquidity lockup that made people desperately sell their homes!"
- MagnumOpus 10y ago
- cft 10y agoSurprised that Evernote is down by 21%. It's clearly a walking dead, should be down 100%.
- jgalt212 10y ago> It's clearly a walking dead. That's a very strong statement to make against a company whose competitors are no more compelling that itself.
- lalala12399 10y agoHow would you feel if you were a Dropbox employee right now
- nickm12 10y agoI'm a Dropbox employee. Yeah, it's not fun to see your valuation go down when equity is part of your compensation. But I was previously an Amazon employee (also compensated in equity) and got to watch the stock value change on a daily basis. Sometimes it would pop after quarterly results, sometimes fall, but more than either of those it would change due to macroeconomic forces that were completely independent of the company's performance. Setting aside the market forces outside our control, As a Dropbox employee I actually feel pretty good. We have a business model that is based on people paying us for value we create directly with our products and I'm excited about what's in the pipeline.
- lalala12399 10y agodid you receive options or RSUs? "not fun" is one thing. being underwater is something more than that I would think...
- nickm12 10y agoRSUs, both at Dropbox and Amazon. And yes, you're right that RSUs are better than options for that reason.
- lalala12399 10y agowhen did Dropbox switch from options to RSUs? i imagine some of the most tenured employees will be screwed...
- draw_down 10y ago"Boy I sure hope I negotiated a good salary instead of discounting it to take funny-money equity."