Perhaps the most Interesting story emerging from the venture capital slowdown and stock market correction that started in late 2021 is the realignment of unicorn valuations.
Instacart and Stripe picked up new, lower 409a ratings. Klarna got a new price via a stock round, and other richly funded startups that raised their money last year are staring at the prospects of flat or downside rounds as 2022 progresses.
And then there’s Discord, which raised $500 million last year at a huge valuation of $14.7 billion, per PitchBook data. The chat-focused software company, which previously turned down an exit to Microsoft for about $10 billion, subsequently saw its valuation plummet, according to Fidelity calculations. (The US investment house, which focuses primarily on publicly traded stocks, owns a number of Discord stocks in its Contrafund, so we regularly check how Fidelity values it.)
As Insider reported for the first time, Fidelity recently downgraded its Discord stock. Is that reduction fair? Today, we’ll delve into Discord’s price change by Fidelity number and what we know about its growth trajectory, then conclude with a comparison of the public markets with the company’s changing value.
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If Fidelity’s cut is fair, Discord will still retain decacorn status, membership in the somewhat rare club of private companies worth $10 billion or more. But we can find that Discord is cheap for Fidelity’s new brand, or it’s still expensive, which would be bad for not only the well-known communication service favored by gamers, but also a large number of other unicorns.