Markets are melting down ☑️ (Official)

Kate Reznykova
November 10, 2022

market snapshot 🏛️

The Multiples are Falling!

This multiple-based valuation system makes it easy for someone to look at financial results for a company and determine what that company is worth and what price they should be willing to pay for the stock. Suppose a company is worth $100 million today and generated $10 million in revenue last year. In that case, the implied LTM multiple is 10x, and if I think that the company is going to make $25 million at the end of next year, I might be willing to pay a share price that values the company at $250 million.

The revenue multiples for public companies have decreased significantly over the last year, declining from 16.0x in 3Q21 to 6.3x in 3Q22. Wow, almost 71% of companies in the Index traded at greater than 10x in 3Q21! This was likely the market peak and the height of irrational investment.

Companies with higher gross profit margins are valued more than those with lower margins. Adobe (88% GPM) and Monday.com (87% GPM) are each tradings at a multiple of 10.6x. EV/Revenue, and Autodesk (90% GPM) are each trading at a multiple of 9.7x.

trending in tech 📈

The percentage of enterprises investing in Kubernetes and containerization in production continues to grow.

Cloud providers are very busy and devoted to making their infrastructure more flexible and able to handle more possibilities. Today's load balancer implementations can support traffic splitting, mirroring, or deep routing strategies. However, the Ingres and Service resources are too simple to support the evolution's advanced use case. The annotations made design consistency and testing challenging. Most of the time, these annotations are not portable and can be difficult to use on different platforms.

Excited about the Gateway API; it's the next standard in development. If we look at the new Gateway API from the value proposition perspective, we are replacing a specification with another one. The purpose of these changes is to make the app more versatile, portable, and reusable. Like with every Kubernetes specification, every implementation will have to implement the specified core capabilities, and every extended capacity will need to be portable if implemented. However, Gateway implementations can add custom capabilities that can't be ported or migrated.

The Gateway API is not yet GA, and some advanced use cases are already available. For example, HTTP header-based matching, HTTP header manipulation, and weighted traffic splitting.

cash flow 🤑

Antavo raises €10 million as customer retention becomes a core concern for businesses
London-based TOffeeAM secures over €5.7 million to use AI to design a new generation of sustainable machines
Worldr is on a mission to build privacy, security and compliance layers, the startup has just secured €11 million
Carbon Re raises new funding to harness AI to decarbonise the most energy-intensive industries
Archax, the FCA-regulated digital asset exchange, brokerage and custodian based in London, has today announced closing its Series A raise of $28.5m

twitter spotlight 🔦

Opendoor has $8B in revenue. Their market cap has dropped from $19B at their peak to $1B today
Bird dropped from $2.4B to $115M
Twilio has ~$3.6B in revenue; they dropped from $70B to ~$8B
Here's why gross margins can kill a business...
— Kyle Harrison (@kwharrison13)
Nov 8, 2022