7 ms·

I still don’t see what the upside is to their valuation? It’s all baked in AFAICT.

by dd36 6y ago

cj 6y ago
Very little. This is a result of the private equity market growing so large that companies can put off going public for very long (Coinbase raised $800 million and the last round was "Series E"). 10-15 years ago, it was much more difficult for companies to raise this much before going public, which forced companies to go public much earlier, before all upside was realized by private investors. The result is private equity and VC funds benefit from the early gains, and by the time the company becomes public (and is accessible to retail investors) there's typically not much of a lucrative near-term upside opportunity. The same thing will happen with Stripe once they finally IPO. They'll debut at an insane valuation, and there won't be much upside opportunity for retail investors to benefit from. Because if there were, they would be able to more easily raise the capital from private investors rather than the public market.
- nostromo 6y ago
  This may be starting to shift as companies are getting much higher valuations on the public markets than they are from VCs. Coinbase is getting a 10x valuation from public markets compared to what they got from private markets just two years ago. In theory, they've left a lot of money on the table by waiting so long to go public and raising from VCs instead. (The price is dropping, so who knows if this will be true for very long.)
- Dopameaner 6y ago
  That said. it is interesting how most of the unicorn companies have reached above their valuations in the current market. Exit valuation of uber was 82.4$Billion, which we considered as insanely high then. Now it sits at 100.2 Market cap. I have been aggregating some of them in my google sheet. Its very peculiar https://docs.google.com/spreadsheets/d/1IPIyrn-36GpepXXkfoLFabAZvV4B3ouMM3a6QI7Syeo/edit?usp=sharing https://docs.google.com/spreadsheets/d/1IPIyrn-36GpepXXkfoLF...
- nojs 6y ago
  > Because if there were, they would be able to more easily raise the capital from private investors rather than the public market Coinbase isn’t raising capital though because it’s a direct listing.
nscalf 6y ago
This is assuming valuations are based off fundamentals. The market is absolutely disconnected from what companies can actually deliver, and instead has become a place to park the surplus of money in the system.
- dd36 6y ago
  Yeah. I was trained as a fundamental analyst. Multiple expansion doesn’t even explain the relative valuations. It feels like a popularity contest sometimes.

I still don’t see what the upside is to their valuation? It’s all baked in AFAICT.

by dd36 6y ago

I still don’t see what the upside is to their valuation? It’s all baked in AFAICT.

cj 6y ago

Very little. This is a result of the private equity market growing so large that companies can put off going public for very long (Coinbase raised $800 million and the last round was "Series E"). 10-15 years ago, it was much more difficult for companies to raise this much before going public, which forced companies to go public much earlier, before all upside was realized by private investors. The result is private equity and VC funds benefit from the early gains, and by the time the company becomes public (and is accessible to retail investors) there's typically not much of a lucrative near-term upside opportunity. The same thing will happen with Stripe once they finally IPO. They'll debut at an insane valuation, and there won't be much upside opportunity for retail investors to benefit from. Because if there were, they would be able to more easily raise the capital from private investors rather than the public market.

nostromo 6y ago
This may be starting to shift as companies are getting much higher valuations on the public markets than they are from VCs. Coinbase is getting a 10x valuation from public markets compared to what they got from private markets just two years ago. In theory, they've left a lot of money on the table by waiting so long to go public and raising from VCs instead. (The price is dropping, so who knows if this will be true for very long.)
Dopameaner 6y ago
That said. it is interesting how most of the unicorn companies have reached above their valuations in the current market. Exit valuation of uber was 82.4$Billion, which we considered as insanely high then. Now it sits at 100.2 Market cap. I have been aggregating some of them in my google sheet. Its very peculiar https://docs.google.com/spreadsheets/d/1IPIyrn-36GpepXXkfoLFabAZvV4B3ouMM3a6QI7Syeo/edit?usp=sharing https://docs.google.com/spreadsheets/d/1IPIyrn-36GpepXXkfoLF...
nojs 6y ago
> Because if there were, they would be able to more easily raise the capital from private investors rather than the public market Coinbase isn’t raising capital though because it’s a direct listing.

nscalf 6y ago

This is assuming valuations are based off fundamentals. The market is absolutely disconnected from what companies can actually deliver, and instead has become a place to park the surplus of money in the system.

dd36 6y ago
Yeah. I was trained as a fundamental analyst. Multiple expansion doesn’t even explain the relative valuations. It feels like a popularity contest sometimes.