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Marc Andreessen: Square IPO Price Proves There Is No Tech Bubble

November 6, 2015, 5:25 PM UTC
Fortune Global Forum 2015
FORTUNE GLOBAL FORUM Tuesday, November 3rd, 2015 2015 FORTUNE GLOBAL FORUM San Francisco, CA, USA 10:00-10:45 am THE NOW AND FUTURE OF MOBILE The mobile revolution is changing the world, altering the way people communicate, purchase, learn, consume news, connect with friends and loved ones, participate in politics, and live their daily lives. Two of the world’s best experts will explore the enormous implications of these changes for companies. Panelists: Marc Andreessen, Co-founder and Partner, Andreessen Horowitz Sheryl Sandberg, Chief Operating Officer, Facebook Moderator: Alan Murray, Fortune Photograph by Stuart Isett/Fortune Global Forum
Photograph by Stuart Isett/Fortune Global Forum

Payments company Square this morning revealed plans to price its IPO shares lower than where it had last raised money in the private markets, leading some to suggest that the company’s new value is illustrative of the tech bubble beginning to deflate. But venture capitalist Marc Andreessen views it differently.

In a series of tweets, Andreessen suggested that a real tech bubble can only exist if irrational exuberance has extended to the public equity markets – where most tech company value lies – and that Square’s relatively modest pricing expectations are evidence that it has not:

Indeed, Square’s existing backers seem to have gotten a bit ahead of Wall Street in terms of price – though its fully-diluted valuation (at the mid-point of its proposed IPO range) would still be higher than its last private rounds.

However, Square still is expected to have an initial market cap of around $4 billion, despite having no profits and slowed growth. So while the public markets might not be pumping up a bubble like Andreessen’s private market peers, that doesn’t mean that they’re completely devoid of hot air.