The Unicorn Disappearing Act

If the public markets are any sign of the future, unicorn valuations will be difficult to understand.  Public companies are an indicator of comparable private companies.  Public companies are also the most comparable to any private business when seeking valuations because they are constantly being priced during the day with various buyers and sellers.  Although private companies are protected from the volatility of the daily public  markets, private companies have very uncertain valuation numbers especially when they are juiced up.

Even though public companies are public, their valuations are uncertain.  An example is seen here with Linkedin ($LNKD) and Tableau Software ($DATA).  Over night their valuations were annihilated.  LinkedIn has $9.6 billion (-43.63%) and Tableau Software has $2.1 billion (-49.44%) valuation disappear in 24 hours.

LNKD Unicorn

DATA unicorn valuation

As we can see, Wall Street does not hold back.  Eventually these private companies need liquidity for insiders, investors, or expansion.  They either raise another round of fantasy juice, get bought out, or do an initial public offering (IPO).  During this process, valuation is re-analyzed.  If the public markets are any indicator of the future, be mindful of any private company hiccups.

Is this the start of “The Disappearing Unicorn Act?



Information contained herein is for informational purposes only and should not be construed as an offer, solicitation, or recommendation to buy or sell securities, or personalized investment, tax or legal advice. The information has been obtained from sources believed to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice. TreveriCapital LLC is a California registered investment advisor.