Revenue Multiple Demystified: Tech Valuations 101

Revenue multiple is one of the most ubiquitous – and arguably crudest – metric used across Wall Street and Silicon Valley to value tech companies. If you were a fly-on-the-wall at your local mom-and-pop Hedge Fund or Venture Capital firm you’d likely hear in-depth conversations like:

  • “It’s a piece of garbage but it’s trading under 1x revenue and cheap.”
  • “This company is trading at 5x revenue?! That’s cheap!”
  • “This company is trading at 5x revenue?! Short it.”
  • “10x is not bad if you believe the addressable market and market share story.”
  • “[XYZ] fund got in at 12x and they’re pretty smart. It’s trading at 6x now. Take a look at it.”
  • “It’s priced at 100x but they’re purposely under monetizing. If you normalize things it’s cheap.”
  • “It’s expensive using any metric but I think the founder will make us money.”
  • “Where’s lunch? I thought you ordered an hour ago.”

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