INSUBCONTINENT EXCLUSIVE:
Today the tech-heavy Nasdaq Composite closed at an all-time record high of 8,814.23, up 0.91% on the day.
The Nasdaq is up more than 32% on
Turning the clock back, the Nasdaq Composite is up around 60% from the end of 2016
Compared to the anti-records set in 2009 during the doldrums that followed the 2008 crisis, the Nasdaq is up a staggering 594%.
The huge run
in value of technology stocks since the last recession is historic
And, given the length of the current global economic expansion, somewhat lost on regular folks.
Times aregood, and it worth reminding
After all, the private markets — the world of startups, venture capital and the next big companies — follow the public markets& lead
If we understand what going on with tech stocks, we&ll better understand what is happening with your local startup cohort.
Or more
precisely, if you&ve been confused about why every startup is worth a bajillion (plus or minus) dollars, this is why.
How many unicorns
will exit before the market turns?
A record run
Putting today Nasdaq level into historical context is a bit difficult
It has been so long since the last, lasting correction in the value of technology companies that their aggregate share price chart is simply
Can you recall the last time tech stocks dropped real value, and stayed down?
Probably not
The reason why is that compared to the post-2008 expansion, the 2000-era technology bubble appears small, pathetic and short-lived
Via YCharts, here a look at the Nasdaq Composite going back into the &80s:
That, in a nutshell is why there are so many unicorns in the
market; that chart is why SaaS multiples are still around 10-11x ARR (per Bessemer, which is rebuilding its cloud index page at the moment)
That chart is a part of why Uber valuation got ahead of its real value
It also why venture capital funds have gotten larger, private equity deals more expensive and SoftBank may raise a second Vision Fund
despite a host of high-profile wobbles
It how Microsoft added mow than 50% of its totalvalue this year.
You get the idea.
The stock market is incredibly strong right now, a fact
that is pushing lots of private investors to pay more for growth in anticipation that companies& revenue multiples will stay high (as
dictated by public comps, or what larger companies are willing to pay for startups)
So long as the Nasdaq keeps going up, that bet makes the punters look smart.
So what?
We could have written this post a few times in the
past week, let alone this year
Of course, we can&t post a similar entry every time a tech-focused index hits a new record high — you&d fine it repetitive
But we also can&t not mention it every time, as it is critical to recall that today warm climate for startups is predicated on a public
market trend that will not — cannot — last.
When will things change? No one knows
So far this December there no mini-crash to worry about
Things just look good, and healthy, and flush with new records.
