Go public now while software valuations make no sense, Part II

Go public now while software valuations make no sense, Part II

On August 5th, TechCrunch wrote that startups should “go public while software valuations make no sense.” What came next was a happy coincidence. Just a few weeks after that post, Unity, JFrog, Asana, Snowflake and Sumo Logic all filed to go public. Today we’re seeing some data from those debuts, most notably the incredibly strong pricing runs from both JFrog and Snowflake. But even more, Snowflake just opened at either $245 or $269.50, depending on your data source. Regardless, the company’s stock is currently worth $276.2 per share, some 130% higher than its IPO price. Which, as we noted earlier, was already pretty high, given the company’s most recent revenue results. Adding to the Snowflake example, JFrog opened worth around $71.30 today, sharply higher than its above-an-already-raised-range IPO price of $44. That’s wild! JFrog is now worth around $7 billion, despite having posted revenue in its last quarter of just $36.4 million. The message from today’s debuts appears to be that valuations are unmoored from old rules — for the moment, that is — and thus companies that can post 100% growth or greater have little in the way of a cap on their upper limit. Our takeaway: Go public now. Adding to the good news is that some of the valuations we’ve understood less than others are holding up. First-day pop-and-drop today’s market isn’t. For example, Lemonade is still up about 50% from its IPO price, and OneMedical is up 100% from its own ...
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