Startups Trading Like Value Stocks
Startups are value stocks now
The real opportunity in private markets appears when price resets faster than the business breaks. By 2023 and 2024, names like Stripe, Flexport, and Databricks showed three different versions of that setup. Stripe kept compounding revenue after its 2023 valuation cut. Flexport saw its market value collapse far more than its operating base. Databricks kept growing fast enough that its private trading discount narrowed against strong public comp math. Buyers in secondaries were increasingly underwriting business fundamentals, not just last round optics.
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Secondaries work like public market stock picking with less disclosure. Investors anchor on revenue, growth, and public comps, then ask whether the private share price already reflects the reset. That is why a company at 1x to 5x revenue after a markup era can look cheap even if sentiment is still weak.
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The spread between market price and business value gets widest in companies hit by cyclical shocks. Flexport peaked near $4.1B revenue in 2022, fell to $1.6B in 2023, then rebounded to $2.1B in 2024, while its latest estimated valuation sat near $3.8B, far below its 2022 peak of $8B.
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For compounders, the discount can close quickly. Stripe grew estimated revenue from $4.0B in 2023 to $5.11B in 2024 as valuation recovered from $50B in March 2023 to $91.5B by February 2025. Databricks moved from $43B in late 2023 to $62B by December 2024 as growth stayed around 60%.
The next phase is a more mature private market where winners trade more like illiquid public equities. That favors companies with recurring disclosures, clear comp sets, and room for regular employee and investor liquidity. As more late stage startups stay private longer, the best bargains will keep showing up where market price lags operating recovery, then disappear as secondary buyers normalize the gap.