Public Markets

What The Hell Just Happened, Public Markets Edition

Today was a bad day for public companies. Markets broadly sold off, leaving most companies in the red. Tech companies, especially, suffered serious damage.

Of course, a day’s movement isn’t a trend. But in a market driven by optimism, and one heading into earnings season, this sort of movement can help change or set the tone for public valuations. If public tech shops are seeing their multiples stretch, private multiples tend to rise as well. The reverse is also true.

Therefore, the selloff should be something that private market enthusiasts (founders, investors, and people claiming to be either a founder or an investor) keep one eye on.

And finally, today’s selloff is part of a larger, October-length route on tech stocks. The tech-heavy Nasdaq kicked off the month around 8,100 points. It’s now down to just over 7,400 at of the time of writing. That’s about an 8.4 percent correction. It’s not the biggest correction in the world, but with valuations as stretched as they are for public tech companies, a return to normal would feel harsh and bleak.

If this is the start of that—and we are not saying that it is—it would mark the end of the buoyant world we’ve lived in for the past few years. So what’s next?

Who Got Hit

Few were spared. The Big Five companies—Alphabet, Facebook, Amazon, Microsoft, and Apple—collectively lost over $190 billion in market cap as a group.

SaaS companies got whacked, with Salesforce dropping 7.2 percent, Hubspot losing 6.7 percent, Shopify losing 5.9 percent, and more.

The newly-launched Bessemer-Nasdaq Cloud Index lost a huge chunk of its value, shifting down 5.3 percent. That means the public cloud stocks—the market comps of many well-valued startups—got kicked in the shins.

Hortonworks and Cloudera, two unprofitable Hadoop shops that are merging, lost 10.9 percent and 10.8 percent apiece. That’s not great for a brace of companies hoping to make three out of the union of two.

But how about some good news. Who wasn’t down today? Well, after some hunting, Dropbox! The San Francisco-based storage and productivity service was up a fraction of a percent today. Well done, Drew and crew! (If you want to do some more exploring, head here.)

The rest of you, be more like this vegetable company that raised $600 million or this Airbnb competitor that just raised $300 million. Their valuations went up!

iStock Photo / interstid

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