Startups Trading Like Call Options
Startups are value stocks now
This was the moment private stock stopped trading like ownership in a present day business and started trading like a call option on a future story. In practice, buyers were not paying for current revenue, margins, or what common stock was worth relative to preferred. They were paying for the chance that a company like Stripe or Brex could layer on new products, keep compounding fast, and grow into an even bigger category before going public.
-
Historically, late stage common usually traded below the last preferred round, often by 15% to 30%, because buyers got weaker rights and less liquidity. In 2020 and 2021 that flipped. Scarce supply of top private names and a flood of crossover capital pushed prices above the last round, so secondary buyers were effectively bidding on upside narratives, not just current fundamentals.
-
Brex is the clean example. It raised in April 2021 at a $7.4B valuation, roughly 100x revenue on about $94M of net interchange revenue, then traded even richer in secondary at about 162x. That extra premium reflected hopes for products that were still ahead, banking, enterprise spend software, and a broader finance suite, not the economics of the card business alone.
-
The same logic showed up at larger scale in Stripe. Secondary buyers paid about $199B in January 2022 versus a $36B last preferred benchmark from 2020, even though private secondaries had historically priced in a discount. When rates rose and public software multiples fell, that option premium collapsed fast, and Stripe reset to $50B in March 2023 while revenue kept growing.
Going forward, private market prices should track two layers more separately, current business value and the premium for future adjacency. As liquidity keeps improving, the strongest companies will still earn some premium for optionality, but it will be narrower and more tied to real evidence, new products with usage, attach, and revenue, not just the promise of becoming a superapp.