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The Rally You Probably Missed

tl;dr: Many recent tech offerings have rebounded from painful lows. Their rally could breathe life into a stagnant IPO market

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While the Mattermark blog tends to focus on private companies, we keep an eye on public markets as their gyrations can impact startups; if the NASDAQ takes a massive hit, or the IPO window closes, Silicon Valley wakes up with a hangover.

Notable in the last half year or so has been the deterioration of a number of recent public offerings. Names like Etsy and Shopify became functional stand-ins for companies that went public to great fanfare, only to see their value evaporate. Coverage wasn’t hard to find.

Recently something interesting has happened, however, that had slipped past my notice: Things are looking a bit better.

Decline And Fear

As an editor, it’s always interesting to go back through your own pages to see what was published during certain moments in time. In the context of our current conversation, two pieces in particular stand out: Danielle Morrill’s How Not To Die, and a short post that I wrote called Stumbling Unicorns.

The first post is an ultimatum for startups to get their house in order, raise additional capital, and survive. The latter is a riff on companies that went public, were worth more than $1 billion, and then ran the risk of falling under that financial threshold. The posts summarize the mood of early 2016 well, I think.

Today, however, we can afford ourselves a touch more optimism. Things are not all good, but they are also not all bad. As such, let’s take a peek at the numbers.

Up From Down

Do not forget that the companies we are about to discuss are down from their 52 week highs. What matters in today’s context is percentage gain from year-to-date lows. We’re focusing on that as that is the delta most interesting — public investors had decided that these companies were worth something, and have now reversed their view and think that they are worth more.

Also recall that their is a connection between public, and private valuations. If public tech companies are worth more in a hurry, it could imply that multiples for revenue and the like bump higher for private companies.

So, here are a few firms that I track to gauge market sentiment regarding technology IPOs, and their percent gain from their 2016 lows1:

  • Etsy: +50%
  • Apigee: +45%
  • Shopify: +44%
  • Square: +42%
  • Box: +36%
  • Atlassian: +33%
  • Fitbit: +27%

Of course, when you measure up from a low, you are bound to get a positive number. And, yes, when you look at the short time frame we are discussing things can move around quite a bit. That means we are looking into chaos and trying to find meaning. But if it is relevant and news-worthy when these companies are falling, it’s worth noting their upswing as well. Especially given the scale we’ve seen.

The caveat to that admonition is that it’s easier to gain percentage points after you have shed most of your value. Correct, and something to keep in mind. But for employees in the above-listed firms, I am sure that the rebound is material in more than simply its monetary capacity.

So, that’s the quiet rally. Let’s see if it keeps up.

1. Data via Google Finance. Share prices may have changed since time of publication. Measured from 52 week low, presuming that took place in 2016. Otherwise, share price low determined using historical share prices.

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© Mattermark 2024. Sources: Mattermark Research, Crunchbase, AngelList.