EQUIAM’s proprietary selection model is a systematic and data-driven model that ranks thousands of growth and late-stage private companies using 90+ proprietary investment signals derived from over 60 million data points. Each month, we generate a comprehensive ranking of our private company universe and thus can construct a real-time sector ranking based on the underlying constituents.
After performing our July analysis of private sector performance, we have highlighted a strong performing sector (SpaceTech) & a weaker performing sector (MobilityTech).
SpaceTech sector constituents scored well due to:
- High capital efficiency, market share capture, and, ultimately, value creation;
- Good hiring growth, positive internal and external sentiment;
- Attractive valuation metrics (e.g. EV/Rev) and growth-adjusted valuation metrics (e.g., EV/Rev/Growth).
On the other hand, the Mobility Tech constituents displayed poor scores in each of the three above signal buckets, which contributed to the Mobility Tech sector, in general, ranking as one of our worst performing sectors.
In the chart below, we highlight Space Tech sector constituents that scored highest on the metrics laid out above, positively contributing to the sector’s overall rank. The opposite holds true for the Mobility Tech companies shown.
Space Technology Overview:
Public and private companies in the Space Tech sector have relatively similar EV/Rev and EV/Rev/Growth multiples, specifically in terms of EV/Rev multiples. Space Technology public market multiples are currently averaging out to 25x EV/Rev, but there is high variability. High growth publicly traded companies such as RocketLab and Virgin Galactic have 25x and 60x+ revenue multiples, respectively. Lower growth and legacy conglomerate companies such as Raytheon and Aerojet have 2.0x multiples. In terms of private companies, the EV/Rev average multiple is 26x and the average EV/Rev/Growth multiple is 16x. The market is putting a premium on Space Technology due to the tremendous growth potential of the sector with an astronomical Total Addressable Market and a multi-decade opportunity in technology advancement.
The cohesion between the public and private market combined with high metric scoring across our valuation, capital efficiency, and employee sentiment metrics within our private sector companies, suggests unique outperformance potential within the Space Tech sector. Furthermore, market sentiment toward this vertical remained strong in the first half of the year, as the median deal size of growth and late-stage deals held steady at $20 million. In addition, the amount of capital raised so far in 2022 has eclipsed 50% of 2021 total capital raised. From our perspective, all signs are pointing towards keeping a close eye on Space Tech private deals for potential successful exits. Once thought an unimaginable probability, large and small companies alike are finding investor interest to back companies building innovative rockets and satellites at lower costs.
Mobility Technology Overview:
Compared to companies within the Space Tech sector, companies in the Mobility Technology sector have not been faring well in the public markets. Many of the companies in the sector, including Blade Air, Bird Global, Uber/Lyft, are sharply down across many metrics. Given the lack of any profitable operating history and path to profitability for some of the companies, it is no surprise that multiples have been quite depressed for the sector. Many are valued at less than 2x-3x revenue, and some companies like Bird Rides, WheelsUp and Lyft are valued at or less than 1.0x revenue.
Our data shows much higher multiples in the private sector with many companies valued at 15x+, based on most recent price marks (many of which are now several months stale). This difference displays an obvious disconnect between the private and public markets (unlike the Space Tech sector) that likely spells trouble going forward for private mobility technology companies. The data also shows a sharp slowdown in hiring and layoffs in the sector with some companies paring down operations, like Bolt Mobility. Given the premium these companies are currently valued at and their poor ranking in our GENIUS model, EQUIAM is less enthusiastic about the near/midterm prospects of the sector.
Disclaimer: This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by EQUIAM LLC (an offering to invest in an EQUIAM LLC fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety). Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.