In the wake of somewhat slack earnings from the recently public Robinhood, you might have expected the public-offering game to slow a bit. Nothing of the sort.
Last night, consumer DTC shoe company Allbirds, backed by an ocean of private capital, priced its IPO at $15 per share, $1 above its expected range. The company also registered an extra million shares for its offering, adding to its heft and the general positive vibe of its upcoming IPO.
This brings us back to our ongoing conversation regarding the value of tech-enabled unicorns busy finding public-market liquidity.
Recall that when Rent the Runway priced its IPO, it was worth “just over 7x its July 31, 2021 run rate (quarter times four).” The fact that the company has since suffered sharp declines from $21 to roughly $16 per share post-debut is not material; we care about IPO prices, not post-listing moves.
Earlier, we noted that at $14 per share and the previously slightly lower share count, Allbirds would be worth just under 9x its current annual run rate on a fully diluted basis. At $15 per share, and with an extra million shares, Allbirds is worth mid-9x its current run rate, depending on how you count shares.
(It’s very early so please don’t get too hung up on modestly relaxed math!)
Allbirds’ IPO pricing, then, backs up our general view that tech-enabled unicorns going public can hope for an upper-single-digit revenue multiple provided they can make a good case to the larger pool of public-market investors.
Yes, but…
Yes, but if Allbirds also struggles post-IPO like Rent the Runway has, our point will be moot. At its current valuation, off nearly 24% from its IPO price, Rent’s revenue multiple is falling quickly. If Allbirds also loses ground after it begins to trade later today, we’ll have to lower our general expectation bracket from 7x-9x to something around 5x-8x, which would be rather disappointing for private unicorns hoping to go public.
All this matters for Sweetgreen, another tech-enabled business that is hoping to list in short order. In its most recent quarter, the salad chain had revenues of $95.84 million. If we convert that to a run rate and then apply the lower end of our present tech-enabled multiple range (7x), Sweetgreen may be about to command a roughly $2.7 billion valuation. If we applied the lower end of our lowered range, it would be worth $1.92 billion.
Both numbers are greater than the price at which the company was valued in 2019 during its Series I, per Crunchbase data. So, either would be a win, to some degree.
Rent the Runway set the initial tech-enabled multiple for us to play with, handing the baton off to Allbirds, which raised the bar as Rent itself deflated post-debut. Let’s see how Allbirds trades and Sweetgreen prices. Once we have those two data points, we’ll be able to draw a clearer multiple — and therefore valuation — range for tech-enabled IPOs.
Finally, looking ahead for you IPO fans out there, NerdWallet and Expensify are up next in our queue, so we may not have more tech-enabled data until we get through some pure-tech numbers first.