“We believe that this scenario represents a new challenge that unicorns will have to face, since Company listings are expected to target more modest ones, so those without strong and solid business models could struggle. For this reason, it will be of vital importance to consider whether the size of the organization and its corporate aspirations are correct within the new scenario, in order to maximize the returns on liquid investments and the proceeds from investment rounds”, commented Eduardo Loiacono. partner of PwC Argentina in the Capital Markets practice.
The impact of rate hikes and inflation
The publication also details that market indicators saw historical records and investment rounds from private companies reached their limits. However, because of the conflict between Russia and Ukraine, the global macroeconomic outlook deteriorated and indicators began to fall, as well as the willingness of investors to participate in investment rounds and IPOs of the so-called unicorns.
“Global inflation and tightening of monetary policies continue to cause volatile valuation conditions and weigh on investor decision-making, particularly for growth stocks, and this will challenge unicorns.
Paths to profitability and money making are expected to continue to gain weight in investment decisions towards unicorns, balanced against more “traditional” factors such as dividend growth and potential market size.
sprawling unicorns
An example of the significant expansion of the value of the unicorns that make up the “top 100” is that the added value of these companies -as of September 2022- is $1.668 billion compared to $1.228 billion in March 2021, which is translates into an increase of 36%.
But they not only increased in value, but also in quantity, since they went from 563 to 1191, which denotes an increase of 90%. Another aspect to highlight is that today there are 44 “Decacorns” (with an estimated value of US$10,000M), compared to 26 in March 2021 and 2 “Hectocorns” (with an estimated value of US$100,000M). It also highlights the fact that the value of Unicorns in Europe and the rest of the world grew by 85% and 58% respectively.
Source: Ambito
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