The disastrous impact the coronavirus has had on the capital markets is massive, but that doesn’t mean now isn’t the time to invest, in fact it might be the perfect time
The disastrous impact the coronavirus has had on the capital markets is massive, but that doesn’t mean now isn’t the time to invest, in fact it might be the perfect time.
As panic control the market, many investors try to liquidate their investment Portfolio and employees try to sell their warrants, it is important to remember two major facts:
1. This crisis, as well as previous crises will eventually come to an end.
2. This crisis as oppose to the 2008 world financial crisis is not a result of a financial instability- it is a result of an exogenic event.
As a result, this event allows sophisticated investors the chance to make a significant profit over a short period.
This brings us to employee stock warrants. With fear consuming individuals, their demand for certainty now in the form of cash massively out ways the value earned by future investments, such that excessive discounts on assets are growing. These discounts are especially true with employee stock warrants. These are illiquid assets at the best of times, and with demand for investment low, the likelihood of the employees transferring their asset into cash will get harder and harder the farther along we go. This opens up an opportunity to those with the capital and resilience to invest now in big unicorns with a big likelihood of going on an IPO in the near future, in a big discount comparing to previous funding rounds, while generating a significant profit to the investors, in a matter of several months.