According to the latest Hiive report of private market transactions, prices of the pre-IPO shares continued to trend down. The median bid price on the Hiive marketplace was 41.9% of the last primary round’s valuation in March 2023 vs. 55.6% in December 2022. The median asking price was 66.8% of the last round’s valuation in March 2023 vs. 74.1% in December 2022. Given that many companies that IPOed in 2020-2021 lost 60+% of their value, the further correction on pre-IPO share prices made sense. The market activity did surge with the lowered price. In the report, Hiive Market CEO said this represents a new normal where buyers and sellers are coming to terms with the new lower prices. The order volume increased but the price remains sluggish.
If we look at individual companies, many companies saw significant price declines from December 2022 to March 2023. DataBricks went from $128-$146 in Dec 2022 to $37-$43 in March 2023. Discord went from $285-$383 to $243-$262. Flexport went from $10.35-$10.45 to $9-$9.47. At the same time, Rippling and Prove Identity are holding strong with prices slightly up.
I am not surprised that more pre-IPO shareholders are selling their shares in marketplaces like Hiive. Liquidity is drying up and the IPO market is still quite frozen. If a significant percentage of my net worth were locked in a private company, I would probably try to liquidate some of my holdings right now to have peace of mind. But if the private market valuations go down further, I will probably spend some time to see if there are any good opportunities to invest. Pessimism is positively correlated with investment returns. I feel there’s still too much optimism in large-cap tech and better opportunities may end up coming from oversold private company shares.
Very cool platform. Will need to keep my eye out for deals as we bottom over the next 6-18 months.