Fidelity Cuts Corporate Tech Holding Valuations

Investment valuation is a tricky thing — mercurial and temperamental, depending on who is doing the valuing. In recent weeks, tech stocks, most notably those of startups, have been volatile. And in some cases, large funds have been taking down their estimates of just how much their private holdings – once euphoric, and here and there outsized – are worth.

The latest news of less sanguine views of how tech firms may be faring in an uncertain global climate comes courtesy of Fidelity Investments, where, as Bloomberg noted, the fund cut the estimates of the value of several holdings in corporate software startups at the beginning of the year.

Yet, said the newswire, at the same time, Fidelity seems to be taking what might be a “more optimistic view” of private consumer tech outfits, with marquee names in the space such as Uber and Snapchat.

Looking at the writedowns: The biggest cut came from Fidelity toward its holdings in CloudFlare Inc., which makes software geared toward, among other things, cybersecurity for enterprises.  That stake gut decimated by more than 30 percent – and the sentiment of CloudFlare CEO Matthew Prince, said Bloomberg, is that market conditions are to blame (and he noted that the Fidelity holdings had been marked up a few times before).

Interestingly, the CEO said the writedown can be viewed as a “baby step” toward marching to public markets, where stocks are volatile.  Indeed, large tech players such as IBM and VMWare have reported forecasts that were less than cheerful for investors, with difficult macro conditions for IT spending this year. Peers to the abovementioned enterprise software companies such as Box and Workday were down more than 20 percent in January alone.

Fidelity took down its stakes in DocuSign and Nutanix (serving data centers) by 17 percent each. And the investment firm lopped its estimation of Dropbox share by 10 percent, as measured by January over December’s levels.  That comes, Bloomberg said, after having written down holdings in the same firm last year.

One bright spot: Fidelity did not change valuations for consumer tech stalwarts Uber, Pinterest and Airbnb.