The Lockup is Up. The Numbers are Ugly

Six months ago, we broke down the IPO math on Netskope and Navan as they came out of the gate. The numbers at IPO looked decent enough on paper — Netskope pricing at $19, Navan in the $25 range, and we noted, as we always do, that the real test would come at lockup.

The lockup is up. Let's talk about what happened.

Netskope (NTSK)

Netskope (NTSK) has dropped from its $19 IPO price to roughly $8.67 as of last Friday — a decline of more than 54% since listing. This is not a story of a broken business. Q4 revenue grew 32% year-over-year to $196 million. ARR hit $811 million. The company turned free cash flow positive for the first time. By every operating metric, Netskope is performing. The market simply doesn't care right now. The lockup expiration on March 13 triggered a wave of selling that sent shares below $8, and a broader narrative about AI threatening legacy cybersecurity software models — the so-called "SaaSpocalypse" — crushed the whole sector along with it. Analysts are calling it a buy at 3x EV/S. The stock is now trading at less than half of what early investors in the November 2025 IPO paid.

Navan (NAVN)

Navan (NAVN) tells a similar story. The corporate travel and expense platform priced at $25, fell 20% on its first day, and has since settled in the low teens. As of last Friday, shares closed at $12.43 — roughly half the peak private valuation. Like Netskope, the fundamentals are actually improving: Q4 revenue of $178 million came in well above estimates, gross booking value surged 42% year-over-year, and the company turned free cash flow positive for the first time. The reward? A stock that has still never recovered its IPO price.

Two different industries. Two genuinely improving businesses. Two stocks that have cut investors' returns in half.

What is Actually Going On

We wrote in February that 2026 would be a structurally different market: fewer winners, larger checks, longer hold periods, and capital consolidating among a small number of elite names. Netskope and Navan are case studies in exactly that dynamic playing out at the public market level.

Both companies got caught in the same trap. They were priced at private valuations set during the 2021 peak or shortly after, when capital was cheap and growth multiples were generous. The Series H investors in Netskope are sitting at a 0.93x return. Navan's Series E through G investors are underwater entirely. These aren't bad companies. They're companies whose late-stage private pricing got ahead of what the public market was willing to pay when it came time to actually set a clearing price.

This is the consolidation story. The public market in 2026 is not rewarding solid. It is rewarding exceptional. The companies that are getting durable post-IPO valuations — Coreweave being the obvious recent example at up 200%+ — are not just growing; they are sitting at the absolute center of a structural market shift. Everything else is getting priced like a discount.

Why Does This Matter?

The question most employees should be asking is not "will my company IPO?" It's "where does my company sit in the market's current hierarchy?"

A few things worth stress-testing against your own situation:

Does your company have a clear AI story, or is it in a category that AI is disrupting? The Netskope selloff was partly driven by fears that AI coding and security tools will erode demand for traditional cybersecurity software. Whether or not that narrative is correct doesn't matter as much as whether your company has a credible answer to it. IPO investors will ask.

What round did the late-stage capital come in at? If your company raised a large round in 2021 or 2022, the math on an IPO is harder. The public market will reprice that capital, and the IPO price will reflect what the market thinks the business is worth today, not what an optimistic VC thought in a zero-rate environment. The companies that will IPO strongest are the ones whose private valuations have compressed or held flat coming into this market — not the ones that have been trying to "grow into" a 2021 multiple for four years.

Is the path to profitability visible, or is it a slide deck? Both Netskope and Navan finally turned free cash flow positive — and it barely moved their stocks. The bar has shifted. Positive FCF is no longer a catalyst; it's table stakes. Companies that are still burning heavily with no clear line to profitability are going to face a brutal reception.

The Elephant in the Room

All of this is happening with the biggest IPO in history sitting in the pipeline. SpaceX filed confidentially with the SEC on April 1, targeting a $1.75 trillion valuation and a June listing. To put that in context: if it prices at target, it would debut as the sixth most valuable company on the planet, ahead of Meta and every energy company ever listed.

SpaceX is not a comparable to Netskope or Navan. It's in a different universe. But that's exactly the point. The IPO market right now is bifurcating into two tiers: companies that will absorb enormous amounts of capital because they represent once-in-a-generation category creation, and everyone else who gets repriced ruthlessly against the risk-free rate and AI disruption fears. There is no middle tier getting a warm welcome.

If your company is building something the market considers tier-one, the window has never been more open. If it isn't, the window is open too — but the price you get for walking through it may be a lot lower than the last 409A suggested.

Tips of the Trade

A section where we provide helpful tips for anyone with stock options or shares at private companies.

Tax Day Is Behind You. Here's How to Use the Quiet Season.

April 15 just passed. For most people that's the finish line, but for employees with equity, it's actually a great time to get ahead.

The stretch between Tax Day and year-end is the quietest planning window of the year, and the most underused. Here's how to make it count.

Understand what last year’s exercise actually cost you

If you exercised ISOs in 2025, pull your Form 3921 and last year's total income. Plug both into our AMT calculator using 2025's numbers to see what the exercise actually cost you in AMT. Then run it again with your 2026 situation to see how the picture changes before you make your next move.

Map out your timing before year-end pressure hits

• Exercise now: Starts the long-term capital gains clock immediately. You need 12 months post-exercise to qualify for the lower rate when you sell.

• Exercise before December 31: You can model how many options to exercise while keeping your AMT spread manageable within one tax year, there's a breakeven point where AMT equals what you'd owe under regular tax anyway. Find that number and exercise up to it.

• Exercise in January: Pushes the AMT bill to April of the following year, giving you extra time before it's due out of pocket, useful if cash flow is the constraint.

• Plan around your company's horizon: A funding round, tender offer, or IPO reshapes all of the above. If any are plausible in the next 12-18 months, that timeline should be driving your exercise decision more than the calendar.

Whichever path fits your situation, run your numbers through our AMT calculator before you decide.

Funding your option exercise can be expensive and a require a large capital outlay. Feel free to reach out to us to discuss your options for partnering with ESO to exercise your options risk-free.

ESO Fund does not provide legal, financial, or tax advice.

March's Top Ten:

1. 1. Anthropic Designated a Supply Chain Risk 

   The Pentagon formally designated Anthropic a supply chain risk in early March — the first time the label, historically reserved for foreign adversaries, has been applied to an American company. The action followed a contract breakdown over Anthropic's refusal to allow its models to be used for autonomous weapons or domestic mass surveillance, with defense contractors directed to certify non-use of Claude on DoW-related work. Anthropic filed suit in two federal courts, and a California judge issued a preliminary injunction by late March, ruling the designation was unconstitutional retaliation.

   2. OpenAI Tops $25B in Annualized Revenue 

   OpenAI crossed $25 billion in annualized revenue as of the end of February, a 17% increase from its year-end 2025 run rate, driven by continued enterprise expansion and subscription growth. The milestone comes as the company finalizes a record $122 billion funding round at an $852 billion valuation. The trajectory — from $2 billion in ARR in 2023 to $6 billion in 2024 to $20 billion+ in 2025 — has no real precedent in enterprise software history at this scale.

   3. Anduril Forecasts $4B+ in Revenue, $1B Loss 

   Anduril shared confidential financials with prospective investors showing it expects to roughly double revenue to approximately $4.3 billion this year, while operating losses rise to $1.2 billion, with no projected EBITDA profitability until 2030. The disclosures came alongside a $4 billion raise at a $60 billion valuation, led by Andreessen Horowitz and Thrive Capital — nearly double its $30.5 billion valuation from June 2025. The financial profile mirrors the classic defense-tech scaling playbook: front-load investment, capture long-duration government contracts, let the margins follow.

   4. Quince Raises $500M, Hits $10.1B Valuation 

   DTC apparel brand Quince closed a $500 million Series E led by Iconiq at a $10.1 billion valuation — more than double its price tag from less than a year prior — after surpassing $1 billion in revenue in 2025. The raise reflects sustained investor appetite for its manufacturer-to-consumer model, which cuts out traditional retail markups to offer premium goods at factory-direct prices. In a DTC sector where most brands are struggling to attract capital, Quince is a clear outlier.

   5. Fal in Talks to Raise at $8B Valuation 

   Generative media infrastructure platform Fal is in talks to raise $300 to $350 million at an $8 billion valuation, nearly double its December 2025 valuation, after growing annualized revenue from $200 million in October to $400 million today. The round's dual-tranche structure — different investor cohorts priced at different entry points — has drawn scrutiny from the venture community as a symptom of inflated AI valuation mechanics. Fal serves three million developers including customers at Adobe, Canva, and Shopify.

   6. Oura Begins Interviewing Banks for IPO 

   Smart ring maker Oura has begun interviewing investment banks for a potential IPO as soon as this year, following a $900 million raise at an $11 billion valuation last fall and revenue projections approaching $1.5 billion for 2026. The company also acquired Helsinki-based AI gesture-recognition startup Doublepoint in March, signaling a platform expansion beyond health tracking toward ambient computing — the kind of IP depth institutional investors want before a public listing.

   7. SpaceX Confidentially Files for IPO 

   SpaceX filed a confidential registration statement with the SEC targeting a $1.75 trillion valuation and a June listing that would be the largest IPO in history. The filing covers a combined entity including Starlink, xAI, and X, with up to 30% of shares reportedly allocated to retail investors — roughly three times the typical norm. At the target valuation, SpaceX would debut as one of the five most valuable companies on Earth.

   8. Anthropic Considers Q4 2026 IPO 

   Anthropic has begun early discussions with Wall Street banks about a potential listing as soon as October, with bankers expecting the offering could raise more than $60 billion. The timing puts Anthropic in a direct race with OpenAI, also targeting Q4. A complicating factor is whether the SEC will require Anthropic to revise how it accounts for cloud computing credits from hyperscaler partners, which could affect the headline revenue figures in the S-1.

   9. Replit Raises $400M at $9B Valuation 

   Replit raised a $400 million Series D at a $9 billion valuation, tripling its price tag from six months prior, led by Georgian Partners with participation from Andreessen Horowitz, Coatue, and the Qatar Investment Authority. The company now claims 50 million users and $240 million in 2025 revenue, targeting $1 billion ARR by year end. The raise adds to mounting evidence that the vibe-coding category — alongside Claude Code, Cursor, and Lovable — has moved from novelty to one of the fastest-scaling sectors in software.

   10. Google Completes $32B Acquisition of Wiz Google officially closed its $32 billion all-cash acquisition of Wiz on March 11, exactly one year after the deal was announced — the largest acquisition in Google's history, the largest-ever acquisition of a venture-backed startup, and the biggest tech exit in Israeli history. Wiz joins Google Cloud while maintaining its brand and multicloud support across AWS and Azure. The deal received unconditional regulatory clearance from the US, EU, and five other jurisdictions after a year-long review.

Startups that are hiring!

• Replit

• Cribl

• Abridge

• Glean

• Temporal

• Vercel

Open positions are per the company's website.

About ESO Fund

ESO Fund empowers startup employees to turn their stock options into reality. Since our inception in 2012, we've been dedicated to providing risk-free funding for the exercise of stock options, ensuring that individuals can seize the opportunities embedded in their equity.

Our mission is simple: to make equity compensation accessible and understandable. Through our innovative solutions, we've assisted countless individuals at 650+ companies in realizing the full value of their stock options, contributing to the success stories of numerous startup employees.

For more information on ESO Fund and how we can help fund your option exercise, please refer to our website at www.esofund.com!