Valuations of recent IPOs, relative to the companies' revenue, are at their highest levels since the dot-com era, sparking concerns among investors
Wall Street Journal : Tweets: @eliotwb , @rationalwalk , @markjeffrey , @daveambrose , @eliotwb , @jessefelder , and @eddyelfenbein Tweets: Eliot Brown / @eliotwb : -Airbnb is worth the combination of Hilton + Marriott + Hyatt -DoorDash is ~ worth the KFC/Taco Bell/Pizza Hut x 2 -Snowflake is worth more than Goldman Sachs anyway read our story on the frenzy https://www.wsj.com/... @rationalwalk : People try to understand the insanity but you don't have to understand it. You just have to stay away from it. https://www.wsj.com/... @markjeffrey : 30% of all dollars ever were printed in 2020. These dollars all went into the stock market. It's not hard to have a ‘sizzling’ IPO market when it's artificially propped up like that. It also won't end well. https://www.wsj.com/... Dave Ambrose / @daveambrose : “Investors this year have valued newly public tech companies at a median of 24x LTM before going public. In 2010s: median multiple for a tech company after its first day of trading was 6x LTM. The same measurement for stocks on the Nasdaq is 4.3x LTM.” https://www.wsj.com/... Eliot Brown / @eliotwb : Valuations of tech companies at IPO usually hover ~6x revenue This year they're up to 24 perhaps it's because these companies are four times better? https://www.wsj.com/... https://twitter.com/... Jesse Felder / @jessefelder : ‘Investors this year have valued newly public tech companies at a median of 23.9x revenue. For most of the 2010s, the median multiple for a tech company after its first day of trading hovered around 6x.’ https://www.wsj.com/... https://twitter.com/... Eddy Elfenbein / @eddyelfenbein : Snowflake is worth more than 200 times revenue. https://www.wsj.com/...
Context & Ripple Effects
The WSJ's framing lands on specific comps: Airbnb is priced above Hilton, Marriott and Hyatt combined, DoorDash roughly double the Yum brands portfolio, and Snowflake is valued north of Goldman Sachs at more than 200 times revenue. The aggregate shift is stark — newly public tech companies carry a median IPO valuation near 24x LTM revenue versus roughly 6x through the 2010s, even as US tech IPO volume had already been climbing since a strong first half of 2018 (~$12.2B raised across 28 deals).
Who captures those multiples matters as much as the multiples themselves. The [[a:965827|VC firms behind these listings — Sutter Hill on Snowflake, Accel on UiPath, Altos on Roblox]] are positioned for blockbuster markups, and the [[a:962371|top 40 venture-backed companies to go public over roughly two years now carry about $1.1T in combined value]]. The concern among investors cited by WSJ is whether any of that survives contact with earnings.
First-order effects
- Buyers of this year's IPOs are paying dot-com-era prices for current revenue — median ~24x LTM sales versus ~6x in the 2010s — while pre-IPO holders convert paper stakes into realized gains at those marks.
- The named comps reset benchmarks for money managers: funds tracking large-cap value must now decide whether Snowflake belongs in the same universe as Goldman Sachs, which it currently out-values despite a fraction of the revenue base.
Second-order effects
- Equity-heavy compensation follows inflated marks into the public market — the 2020 IPO cohort's $21.9M median CEO pay shows listing-day valuations flowing straight into insider payouts, raising proxy-season friction with new shareholders.
- Later-stage startups price off the newly set comps, so each high-multiple debut ratchets up private-round valuations and the terms critics already flagged when startups leaned on vague non-GAAP metrics back in 2015.
Third-order effects
- If the pattern holds and then reverses, the compression would hit the ~$1.1T in value concentrated across the recent IPO vintage, with losses landing disproportionately on the public buyers who entered at peak multiples rather than the VCs who exited into them.
- Sustained pricing of revenue over profit invites the recurring corrective cycle — analyst skepticism, possible regulatory attention to how IPO valuations are marketed — that historically follows each era in which sales multiples detach from the 2010s baseline.
The trend: Public-market tech is repricing toward dot-com-era revenue multiples, completing a capital cycle in which venture backers exit at peaks and public investors absorb the duration risk.