Sweetgreen’s IPO pricing guidance illuminates valuation range for tech-enabled companies

Sweetgreen, a fast-casual restaurant chain that attracted ample venture capital during its life as a private company, set early terms for its IPO this morning.

The well-known salad slinger expects to sell stock in its public market debut at a range of $23 to $25 per share. Inclusive of shares reserved for its underwriting banks, Sweetgreen is worth between $2.5 billion and $2.7 billion at those prices. IPO-watching group Renaissance Capital estimates that at the midpoint of its IPO price range, Sweetgreen is worth $3.0 billion on a fully diluted basis; at the top end of its price range, Sweetgreen’s fully diluted valuation swells to $3.13 billion.

The prices are a win across the board for Sweetgreen, which last raised $156 million at a $1.78 billion post-money valuation, according to PitchBook data. Its investors all stand to enjoy winsome markups on the capital they invested into the salad chain.

But the company’s IPO is notable for a far more interesting reason than that some already wealthy individuals and groups are going to have more money in short order. Sweetgreen’s IPO pricing is fascinating because it fits neatly into our budding thesis regarding the value of tech-enabled companies when they go public.

Upper single digits

When Rent the Runway priced its IPO, it earned a revenue multiple just over the 7x mark. It has since lost ground as a public company but still set a recent benchmark for what a tech-enabled business might be worth in a public debut. Note that the Rent multiple is not bearish; non-SaaS unicorns today can earn old-fashioned SaaS multiples, which is rather bullish, I think.

Allbirds was next up. It priced at $15 per share, giving it what we calculated to be around a roughly 9x multiple. The company then saw its value appreciate to around $23 per share as of this morning.

With two upper-single-digit IPO revenue multiples for DTC companies in a row, it felt like a price range was forming. Rent declined while Allbirds rose, but their IPO pricing was range-setting.

Enter Sweetgreen.