WSJ Headline: Highflying Tiger Global Humbled by Unraveling of Giant Tech Bet
Subheadline: The New York firm was a heavy investor in technology stocks and startups when the market peaked. The downturn has vaporized years of its gains.
https://archive.ph/3Bxl5
Tiger Global Management rode the tech boom like no other investment firm. It was funding more startups than any other U.S. investor when the market peaked last year, and had tens of billions of dollars from pensions, endowments and rich clients riding on some of Silicon Valley’s hottest stocks.
With tech values plunging, the New York firm is humbled. The market rout has vaporized years of gains in a matter of months, calling into question Tiger’s big bets.
Fueling Tiger’s rise was a double-barreled business: A stock-picking arm put money mostly into public companies, while its venture-capital funds invested in startups throughout the world. Both bet bigger on tech as the market crested, leaving the firm exposed on both fronts.
Oof!
https://archive.ph/3Bxl5
As the tech boom raged through the late 2010s, they added bets on companies like used-car website Carvana Co., while the venture fund invested early in Peloton Interactive Inc. and shoe maker Allbirds Inc. Tiger handed out Allbirds sneakers to attendees at a meeting of its investors before the pandemic, an investor said.
As tech stocks surged with the pandemic, the duo bet bigger on the sector. Wall Street promoted companies in business software and home delivery, viewing the pandemic as a catalyst for rapid adoption of their products and apps. Tiger agreed: In a summer 2021 slide presentation to investors, it said it had a “relentless focus” on “the Internet, the defining economic theme of this generation.”
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When Tiger had built a stake of more than $2 billion in Snowflake in late 2021, the startup’s market capitalization was around 100 times its annual revenue. Historically, software firms have been valued closer to five times revenue. Snowflake, Zoom and DoorDash shares are all down more than 60% since November. Carvana’s stock is down more than 90% from its high.