Weekly Update #103: A Look at 5 Recent IPOs and Their Performance

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Weekly Update

Live offerings, preview listings, and some analysis on the pre-IPO space

Hello Investors,
As macro factors start to weigh on global equity markets, we thought we'd revisit 5 venture-backed companies that went public around 6 months ago and see how they're doing. We tracked:

First, we looked at the stock's performance over the past 6 months:

The two FinTech companies, OnDeck and LendingClub, have underperformed the Nasdaq while software companies Box, New Relic, and Hortonworks have managed to maintain 25%+ gains.

Next, we looked at how the market is valuing these companies on their trailing twelve month (TTM) revenue:

In all but one instance, the Sales Multiple (Market Cap divided by TTM revenue) has decreased. This can be interpreted in one of a few ways:

  • Investors have re-calibrated the price they are willing to pay for growing tech companies,
  • These five companies are "growing" into their multiple (ie: investors were actually valuing the companies on expected revenue growth, and the companies are delivering on that expectation)
  • the Sales Multiple is one of many factors that go towards valuation

OnDeck's contract is the most extreme: investors initially valued OnDeck at a 20x multiple, and that has now shrunk to 4.4x, despite the company's growing revenue. 

What else can we take from this (small) sample of post-IPO tech companies? There has always been a lot of debate about the 6-month lockup for private company shareholders (employees and early investors usually must wait until 180 days after the IPO before they can begin selling shares). As a group, it would appear that there's been little, if any, post-lockup selloff after the six month mark.  

In other news...
Farhad Manjoo explores the consequences (both good and bad) of the "Private IPO"
Commentary on the massive impact Amazon's website hosting platform has had through its aggressive price reductions, such as lowering barriers to entry for tech entrepreneurs and lowering the cost of service to consumers.
Following the fallout from controversial administrative decisions by Reddit's upper management, Fred Wilson of Union Square Ventures speculates on the future of websites predicated on freedom of speech and user-generated content.
Money transfer and bill-paying service Xoom was acquired over the weekend, as PayPal expands their payments and transfer business prior to their spinoff from Ebay.
While a deviation from tech-centric news, this musing on how a new Greek currency would be valued is worth a read following the results of the weekend referendum.
Phil Haslett | Founder & Head of Investor Relations | EquityZen 
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