The Year Tech Unicorns Became Donkeys
Investors would do better to align their hopes with reality.
Investors crowded onto inflated expectations in 2019.
Photographer: Dan Kitwood/Getty Images Europe2019 may be remembered as the year so many unicorns turned into donkeys. After its IPO, Uber fell from the stratospheric valuation it commanded as a private company. So did its prime competitor, Lyft — together, they have shed more than $40 billion in value since going public. Even more spectacularly, WeWork lost $40 billion in value before its IPO. African e-commerce darling, Jumia, rode into public markets on high expectations but lost half its value within six months.
In 2020, many other high-profile companies are expected to go public — Airbnb, Gitlab and Didi Chuxing, to name only three. The debacles of 2019 carry two simple lessons for investors and analysts: first, as many have argued, do the hard work of valuing a company the old-fashioned way, and second, far more overlooked, adjust a start-up’s value according to its realistic global reach. Given the borderless nature of most digital unicorns, it’s important to remember that doing business — especially digital business — in one country is very different from doing business in another.