The Unicorn Hedge
Dave McClure

The title of the article sounds intriguing but the evidence presented to substantiate the claims are quite weak here.

  1. Yes, there could be a bubble in public markets but that doesn’t deflate the bubble in private tech markets. Btw, S&P 500 is trading below its historical maxima and in fact tech companies, as the author himself admits, contribute significantly to the inflated PE multiples for S&P 500.
  2. The author seems to have conveniently ignored the fate of the tech IPOs (goPro, Fitbit, lendingclub) in the last 2 years, most of which are trading at 40–50% their listing market cap. Does it not indicate a bubble in the private markets?
  3. I agree there are some private tech companies that are not over-valued (though I would refrain from using under-valued), those are mostly small, less-known and undiscovered companies. But as we know, the bubble in the market is created/punctured by how the large caps trade. And large caps in the private market today have reached insane valuation. How do you justify a $70B valuation for Uber — a company losing $1.2B every 6 months, with a threat of disruption and risk of growth tapering off in the near term future, after losing out on the China market. How do you justify the valuation of companies like Xiaomi, Flipkart, Pinterest etc.?
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