Private Company Stocks Outperform Public Equities by 107% in 2021
Stocks of private companies far outpaced public equities last year, according to ApeVue, the first independent, daily pricing data service for pre-IPO stocks. Amid a strong year in public markets, the 50 most active private companies in the institutional market, including well known unicorns like SpaceX, Impossible Foods and Epic Games, and less visible, but significant companies like Stripe, Chime and Discord, returned 133.91% for investors in 2021.
Market overview: Private vs public equity markets
The value of the private companies priced by ApeVue rose steadily last year, peaking at 134.18% return in the fourth quarter. In comparison, the S&P 500 Index returned 26.89% in 2021. In January of this year, the 50-private company basket studied by ApeVue returned a modest 0.71%, while the S&P 500 Index was down 5.3%.
“While asset managers might intuit that private markets out performed public ones, we now have the data to more accurately understand the trends on a company by company, day by day basis,” said Nicholas Fusco, CEO and founder of ApeVue. “Access to this level of price transparency can help asset managers participate in the private market by providing the objective inputs funds require for robust, daily NAV calculation.”
Among the 50 companies studied by ApeVue, Revolut had one of the best returns (+282.44%) while a notable laggard, Impossible Foods, was down 5.59% in 2021.
Sector highlights: Fintech & Entertainment
ApeVue data from prominent sectors like financial technology and entertainment also show private companies eclipsing their public peers in terms of return. The fintech (e.g., banking, payments, DeFi) components of the ApeVue basket returned 178.70% in 2021, compared to the 15.41% gain for the MSCI World Select Top 30 Fintech Innovation Index.
The entertainment (e.g., social media, gaming, messaging) components of the ApeVue basket returned 135.63% in 2021, compared to the nearly 21% return posted by the MSCI World Media and Entertainment Index.
In January 2022, prices of the private fintech companies were up 4.22% and the private entertainment companies were virtually flat (up 0.01%).
Unicorn highlights: Impossible Foods & Stripe
On a single-name basis, ApeVue data show the degree to which private company prices are correlated to their publicly-traded peers. Impossible Foods was down 5.59% for 2021, but more resilient than Beyond Meat (NASDAQ: BYND), which was down 47.87%. Nevertheless, ApeVue data show strong price correlation, beginning in Q3 2021, between public and private markets in this case.
In fintech, however, private and public markets diverged considerably. Stripe was up 81.35% in 2021, in sharp contrast to PayPal (NASDAQ: PYPL) and Block(NYSE: SQ), which were down 19.48% and 25.79%, respectively, last year.
“Private markets operate independently from public markets,” observed Nicholas Fusco. “To be rigorous and consistent in pricing private company stocks, asset managers need transaction and activity data from those markets because public peers are not always reliable indicators of value and trends in the private market.”
ApeVue uses observable market information, including transactions, bid and offer data and funding details, in its service. The pricing mechanism is objective, transparent, auditable and resembles methodologies standard in other markets such as syndicated loans, structured credit, bonds and derivatives.
The ApeVue service currently provides Daily Pricing, Pricing History (six month minimum for most entities), Unique Company Identifiers and Sector/Industry Tags. Data are available via API or secure file transfer.
ApeVue provides objective, daily pricing for non-public company stocks. Our independent data help institutional investors understand market conditions, measure risk and assign valuations with confidence. Price data from ApeVue are constructed from aggregated, anonymized market activity information sourced from licensed brokers at the nexus of institutional trading. Unlike traditional company valuation assessments done quarterly, ApeVue data show equity price fluctuations between funding rounds and regular financial reporting periods. With the largest, most timely, independent data set covering non-listed companies, ApeVue is the best source for up-to-date insights about the dynamic pre-IPO company market.