Scalper1 News
A bubble in valuations for private Internet companies is about to burst, according to Silicon Valley provocateur Trip Chowdhry, an analyst with Global Equities Research. “The startup bubble is bursting, the exit value of many startups may be one-fifth of the peak value,” Chowdhry said in a research report Monday. Some startups believed to have qualified as unicorns — meaning they have valuations above $1 billion — will lose that status, he said. IBM ’s ( IBM ) acquisition on March 31 of Bluewolf Group, a provider of cloud consulting and implementation services, could be a benchmark, Chowdhry said. Bluewolf was rumored to be valued at more than $1 billion a year ago, but was likely purchased for about $200 million, he said. IBM didn’t disclose financial details of that acquisition, indicating IBM considers the deal immaterial to its financials, where it almost certainly would give details of any $1 billion acquisition. At $200 million, the acquisition would be just one-fifth Bluewolf’s apparent peak value, says the analyst. Using the Bluewolf deal as a benchmark, enterprise cloud company Nutanix would have a true value of $400 million, not $2 billion as currently believed, the analyst says. Cloud-based software firm Cloudera is probably worth $900 million, not $4.5 billion as venture finance rounds have valued it, Chowdhry said. If other unicorns are revalued at one-fifth their peak valuation, file-hosting service Dropbox and visual bookmarking tool Pinterest are each worth $2.2 billion, not their reported $11 billion. By a similar measure, big data analysis firm Palantir would be worth $4 billion (not $20 billion), accommodations rental firm Airbnb would be worth $5.1 billion (not $25.5 billion), and ride-hailing service Uber Technologies would be worth $12 billion (not $60 billion), Chowdhry said. Chowdhry isn’t alone in calling a bubble in valuations of startups. The Wall Street Journal reported this month that venture capitalists are seeing signs of a bubble getting ready to pop. Scalper1 News
Scalper1 News