Graphic design platform Canva now has a price tag of $55 billion. Can you buy shares of it on the ASX?
If you haven’t heard of Canva before, it’s an Australian-made online design and publishing tool. Its mission to empower everyone in the world to design anything and publish anywhere.
How is Canva worth $55 billion?
Canva is currently a private business. But private companies have valuations as well. One of the easiest ways to judge a value is the price that investors are willing to buy shares of the unlisted business at. That’s essentially how it works for listed ASX shares as well.
A key difference between listed and unlisted businesses is the fact that there can be loads of share trades of an ASX business every day. Whereas private company shares may only change hands every few months or even less often.
When a private transaction happens, you can multiply the value of that trade to the entire business value. For example, if an investor is willing to pay $500 million for a 1% stake of a business, then that means you can value the whole business at $50 billion. Even if there isn’t an investor that would want to buy the whole business for $50 billion (or have the funds).
According to the Australian Financial Review, Canva experienced a US$200 million funding round that valued it at $55 billion, or US$40 billion. However, that does only represent a small proportion of Canva changing hands.
A few months ago the previous funding round put its value at US$15 billion.
Revenue, positive cashflow and growth
Canva apparently has US$700 million of annualised revenue right now and it’s expected to reach US$1 billion by the end of the calendar year. The revenue growth rate is more than 100%.
The AFR also reported that Canva has been cashflow positive since 2017. In that sense, the company doesn’t have a need to go to the share market for new money. It hasn’t actually used any of the capital it has raised since 2015.
But it does have plans to start investing some of the excess capital for growth.
It was reported that Canva says it has more than 500,000 paying teams subscribed to Canva, including from companies like American Airlines, Zoom, SkyScanner, Intel, Salesforce, PayPal, Live Nation and Marriott International.
Is Canva listing on the ASX soon?
You’d think the founders of Canva would be thinking about listing with a $55 billion valuation and a desire to give away a lot of it for philanthropic reasons.
However, some fund managers believe Canva wouldn’t fetch that much if it were listed at the moment.
The AFR speculated that if Canva were to list, it won’t be for at least a year. If it does eventually list on the ASX, it could be Australia’s hottest ever initial public offering (IPO) and immediately put it up there in size terms with the likes of Telstra Corporation Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES).
