Private markets capture early-stage IPO appreciation
The guest argued that because modern tech companies stay private much longer, the bulk of their early-stage valuation growth has already accrued to private holders before the public IPO.
The argument
Unlike the dot-com era when young startups went public early, the average age of an IPO is now 12 years, with SpaceX at 24 years. Consequently, public investors buying at the debut face multi-trillion-dollar valuations with a much thinner margin of error.
The thesis, stress-tested
✓ What validates it
- ✓Post-IPO performance of SpaceX or OpenAI trading below their initial listing price within 6 months
- ✓Slowing revenue growth rates revealed in S-1 filings
▸ Risks discussed
- ▸Retail investors buying the initial public 'pop' may face immediate downside
- ▸High valuation leaves little room for operational errors
Hear it yourself
"So this, you know, is just gonna be general in nature. But those are the names coming out and that the market is talking about it. So let's talk about three reasons this is different than normal. I think reason number one is the IPO markets, people have to recognize they've changed dramatically over the years. So a lot of us are still locked into almost the 2,000 time frame when it was the .coms. And back then, the average company was kind of a new startup concept. It was like a small cap stock, something you you weren't sure on the concept or the name. And now the average life of an IPO is twelve years."
02:15
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