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If investors are enthusiastically in disagreement about the potential of a company (both the buy + sell sides), it's probably better for the company's valuation
by alehul 10y ago
If investors are enthusiastically in disagreement about the potential of a company (both the buy + sell sides), it's probably better for the company's valuation to stay private. It blocks out any negative opinions' effect that you'd have if public via investors shorting / betting against the company.
This probably leads to an overly high valuation it wouldn't hold up to on the stock market, though, (i.e. Uber) so then the company feels pressured to stay private until they can justify that overly high valuation. In Uber's case, though, they'll keep raising money at absurd valuations and keep the cycle going.
Palantir is an exception: If they were public and had to disclose much information, their value would plummet, so it'll likely stay private in the foreseeable future.
- frgtpsswrdlame 10y agoIsn't that bad for employees with stock options though? The market could tell them how much those options are really worth.
- alehul 10y agoCompletely, and a small part of why employees are cautioned on here to take salary over equity. The market telling them would be a loss of billions for the investors/founders, both on the value of their own equity and the increased equity they'd have to offer employees (many exceptions apply, but this seems to be the case particularly with startups who lack an easy path to profitability but can show substantial growth).
- hkmurakami 10y agoPalantir will regularly buy its employees' equity fwiw.
- jonknee 10y agoBut without the market you could easily be getting ripped off selling your shares back... They're not doing it out of the goodness of their heart.