Ok, so we all know it’s an awful public market for growth technology and biotech companies. But the full force of just how awful didn’t quite hit home until this morning, when I repeated an exercise last performed as a tech reporter during the dotcom crash: Checking to see how many VC-backed companies that went public in the last two years are now trading below cash value. The answer: Lots.I just got through the B’s in my alphabetical order scan, and came up with three:
Authentec is profitable, has $62 million in cash, no debt, and a $42 million market cap, according to Yahoo Finance, which uses last quarterly figures.
Bioform Medical has $50 million in cash, $86,000 in debt, and a market cap of $37 million
Biodel has $92 million cash on hand, no debt, and a $58 million market cap.
Skipping down to the Gs I found perhaps the most dramatic crash-and-burn, Glu Mobile. Shares in the company, which peaked in July 2007 at over $14, now trades at a quarter each. The company’s got $21 million cash and a market cap around $7 million.
Last time I wrote about stocks trading below cash, sometime around 2001, I talked to a bunch of analysts who basically said the same thing: Buying below cash value should be a great deal, unless that cash stash is going in the wrong direction. As it turned out, most of those trading at-or-below cash companies did fizzle out, though a few recovered and gave back great returns. (Ask Jeeves, for example, went from a buck to over $20 after the market hit bottom.)
This time, the downturn means venture investors who held onto stakes in the companies they took public are probably looking at a lot of underwater holdings – yet another reason they’re not exactly clamoring to take new ones public.