6/8/2023: The Secondary Market Might Be Bottoming

Pre-IPO stock activities are picking up

Hiive Market published their latest report on private market transactions. The gap between bid/ask finally shrunk but the discount from the last round’s valuations remains steep as shown above. In the report, Hiive Market CEO made the following statement:

During the month of May we observed a continued rise in activity on the Hiive platform, with the total value of securities listed for sale, the total number of live orders, and the number of private issuers with buy/sell activity on-platform all rising.  Meanwhile, overall market conditions remained weak with most metrics continuing to trend down. Private markets remained defiant in the face of buoyant public markets where values have been steadily rising since early in the year. This ongoing divergence might be explained by the typical 6-9 month lag between public and private markets. And if public markets did indeed reach a bottom late last year, then the historic lag could also suggest that private markets are bottoming now. 

It is interesting that the activities of private market secondaries are picking up. I know the pre-seed and seed stage activities have been quite muted except for AI deals this year. There are also quite a few shutdowns and (intended) recapitalizations in the past couple of months. But we might be seeing the later stage companies finally turning the corner, especially for companies who have an AI angle to play like DataBricks or Reddit. The next few months will be really interesting for the IPO market. The AI boom and the Fed tightening kind of cancel each other out. It’s hard to predict if we will see a recovery on tech or a continuing decline. But we are about to find out in the next couple of quarters.