Snap is finally on Wall Street, and it has settled on a final price, putting the company’s valuation at around $24 billion, according to the Wall Street Journal. With the valuation, Snapchat is staying close to the original valuation it was rumored to go public with from last October, which was around $25 billion. This is impressive, due to the fact that since its S-1 application a month ago, headlines have mainly circled Snapchat’s slowing growth, the growing competition with Facebook and leadership challenges.
In fact, Zirra’s algorithm estimated all along that Snapchat’s value was around $26 billion; a value issued long before the S-1 papers were published. That is a two billion dollar difference, which sounds high but is in fact only a 7.6% deviation from the real number, which is not that bad for a valuation algorithm that doesn’t look at the company’s financial books. No doubt the stock will go up, and then will go a bit down, and then the stock price will get a life of its own. But Snapchat got what it wanted, raising more than 10% of its valuation ($3.4 billion) and not giving up a lot in return: non-voting shares that will not allow new shareholders to participate in decision making. Co-founders Evan Spiegel and Bobby Murphy are still in full control of the company and will continue to be in the near future. [Read here for Zirra’s spotlight report on Snapchat]
— Katie Roof (@Katie_Roof) March 2, 2017
Another report which was actually anticipated by Zirra’s algorithm a month ago is that of Lyft’s devaluation, first reported yesterday by the Wall Street Journal. After failing to sell itself at a $9 billion valuation last summer, Lyft is back to pitch investors again, now with a $6 billion valuation, slightly above the $5.5 billion they were valued last round. According to WSJ, Lyft is now trying to raise $500 million in funding in order to keep financing its expansion into more cities and territories in the U.S and to better compete with Uber, which is now richer and bigger after selling Uber China to Didi last summer.
Research completed a little more than a month ago by Zirra valued Lyft at no more than $5.8 billion, slightly less than the number published yesterday by the WSJ. Again. Zirra’s valuation algorithm was very close. Not bad for an algorithm that does not communicate in any way with the company it’s evaluating. [Click here for Zirra’s full spotlight report on Lyft or here for Zirra’s list of the 5 highest valued automotive startups]
How is the magic done?
The Zirra Valuation Process uses AI and machine learning technology and it involves both Intrinsic and Relative valuation algorithms. The intrinsic data includes revenue and expense estimations, traffic trajectories, investment history and velocity, based on aggregated sources. In the relative analysis, data is compared and benchmarked with a database of thousands of companies with correlation to stage, space, size, and trajectory.
It then produces a map of competitors based on the data set, rated in accordance with the degree of direct competition, its size, threat, and proximity of the shared customer and partner base. Results are sent to relevant experts in our 450 strong expert community. Experts comment on both quantitative analytics (scores and metrics) and qualitative analytics (risks, opportunities, competitors).
Where do we get the data from?
Data is extracted from 85 different data sources, regularly updated (daily to weekly). Sources include both open and licensed directories such as the company website, Bloomberg, Linkedin, SimilarWeb and Adwords; It can be “derived data” such as Glassdoor reviews, consumer reviews, sentiment analysis from open web articles; or other data points such as academic researches, stock indexes, and macroeconomic parameters.
Why did we do it?
The private tech industry is one of the most secretive and mysterious – yet it is rich and growing rapidly. Those who are working in the startup ecosystem themselves, entrepreneurs, venture capitalists, reporters, are suffering from serious disinformation regarding the economy that surrounds them. The result of this panoply of secrets, taboos, and mysteries is enormous disinformation surrounding the startups market. Here at Zirra, we decided to do something about that. We have made it our mission to bring transparency to the private tech market. [Read here our post on valuing companies]