Travel marketplaces have made a big comeback. Multiples hit 9x in Q1 which is remarkable for a business that traditionally trades no greater than ~3x. Booking.com is trading at an especially strong 15x and is the only company to maintain its profitability over the last 12 months ($1bln).
Labor intensive space. The only reason we even include these companies in our analysis is because investors like Softbank insist on labelling these services businesses as tech co’s. At best, they’re tech enabled which isn’t the same thing at all. Remember when Groupon was a high flier? Well today it has stopped growing (-36% YOY growth) and trades at 0.8x revenue. This was one of the fastest growing companies ever that came up during the recession of ’08, and now no one cares. Redfin and Opendoor feel especially overvalued.
Grubhub. Grubhub popped to 4.4x revenue in Q4 2019, but that’s because they announced they’re for sale. We’ll see what happens there. Meal delivery has become increasingly competitive as peers like Uber and DoorDash continue to overspend on customer acquisition as if the market can only support one winner. Uber did buy Postmates July 6th for $2.65bln in stock.
Subscription. Subscription trades at 10x revenue. Care.com no longer trades as it got acquired by IAC in December 2019 for $500mm (2.5x revenue). Match is at 17x revenue, Bumbl is below that at 13x, while Angie’s List (now part of HomeAdvisor) is at 5x. Bumbl and Match both have wonderful profitability and high margins (21% and 17% respectively).
Ecommerce is varied. The sector is the least attractive to investors, with a median revenue multiple of 2.5x. There is a big difference between what we would call premium ecommerce like Stamps.com, Carvana, and Amazon (4.5x, 8.6x, and 4.4x), versus weak ecommerce like Blue Apron (0.3x revenue). Coursera is a big outlier at 24x. Chewy which is a newer ecom player ($7bln in revenue) trades at 4.9x. We would note it has excellent customer retention metrics though and will likely be a premium ecom player for years to come, if not a nice acquisition target.
sammy@blossomstreetventures.com
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