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July 17, 2014 | 3-minute read (622 words)
With Priceline’s announced purchase of OpenTable coming at a 46% premium to where OpenTable’s stock recently traded, the highest for an internet stock since before the Great Recession, following hot on the heels of Facebook valuing WhatsApp at $19B, and Uber’s valuation recently topping $18 billion in its latest funding round, I figure it’s time to share my thoughts on whether we are indeed witnessing the latest bubble.
First off, how do funding, pricing, and valuations compare to those in previous periods?
Looking at private markets:
While in the public:
And what are the supports for valuations? In other words, are they sustainable?
Unlike the last technology bubble, most companies being funded today, have:
Still, do the fundamentals really justify the huge run-up in valuations?
So: many more funders and a lack of other opportunities to score a big payday have driven outsize increases in valuations. The bubble is real and particularly active in early-stage companies.
What do you think? Are tech valuations in bubble territory? Why or why not? Tell us about it in the comments section below.
David Ehrenberg is the founder and CEO of Early Growth Financial Services, an outsourced financial services firm that provides small to mid-sized companies with day-to-day accounting, strategic finance, CFO, tax, and valuation services and support. He’s a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.
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