Introduction
In the public market, prices are transparent, trade volume is typically high and transactions occur in real time. In the private secondary market, price discovery is more opaque and reliant on less standardized data points. For investors and shareholders looking to trade private company shares, understanding the different pricing signals available is helpful for making informed decisions.
This guide explores three of the most important private market pricing signals: highest bid, lowest ask and last matched. It also outlines additional indicators investors can consider to form a more complete view of market values of shares.
How order books work: Understanding bids, asks and spreads
Just like public exchanges, private trading platforms like P2P Shares operate with an order book that aggregates current bids (offers to buy) and asks (offers to sell). While transaction volume in the private market is typically lower, this structure still plays a fundamental role in shaping pricing dynamics. Here are two key definitions in this paradigm:
- Highest bid: The highest price posted a buyer is willing to pay.
- Lowest ask: The lowest price posted a seller is willing to accept.
The difference between the two is known as the bid-ask spread. A narrow spread typically indicates a more active market, with buyer and seller expectations closely aligned. A wider spread can potentially signal price uncertainty, valuation gaps or lower liquidity opportunity.
On the P2P Shares platform, buyers can place non-binding “bids” to purchase shares and sellers can place “asks”. These bids and asks help populate what constitutes the “active market” of private companies listed on P2P Shares marketplace. This provides visibility into market appetite for shares—even when no recent trades have occurred.
The active market doesn’t just indicate current interest—it also sets the stage for price discovery. When the highest bid meets the lowest ask, a transaction can occur, and that matched price becomes a critical reference point.
Last matched: The most recent trade
- Last match: The last matched price is the most recent transaction price at which a buyer and seller successfully completed a trade of shares on the P2P Shares platform.
- What it signals: This price reflects the most recent market-clearing level—the price at which demand and supply aligned for that company’s shares.
- Caveats: Because private shares don’t trade as frequently as public shares, the last matched price can become stale. It may not reflect current investor sentiment, especially if there have been major developments—like new funding rounds, leadership changes or regulatory events—since the last trade.
Still, last matched prices remain a useful reference point for gauging historical demand, anchoring price discussions and contextualizing the spread between active bids and asks.
Other pricing indicators to consider
While last matched transactions offer vital insights, a more extensive pricing analysis in the private market can sometimes summon a broader perspective. Here are additional data sources and indicators that can inform valuations:
1. Public and private company comparables
Valuation multiples (such as price-to-revenue or price-to-earnings) from comparable public companies can be used as benchmarks to estimate fair value in the private market. Similarly, private company funding rounds or disclosed valuations can offer peer-based context—though direct comparisons require careful normalization for growth, risk and liquidity differences.
2. Fund marks
Funds that hold private company shares are required to disclose their internal fair value estimates—often quarterly. These marks reflect institutional perspectives on the company’s current value, which can be especially telling if multiple large investors converge on a similar estimate. While lagging by nature, these marks still serve as a valuable triangulation point.
3. News and market sentiment
Announcements about product launches, earnings milestones, layoffs or IPO plans have the potential to dramatically shift perception and share pricing. Staying informed about relevant news is critical to understanding what may drive pricing interest (or disinterest) in a company’s shares.
4. Leadership and company governance changes
Executive transitions—such as a founder departure, new management or a board reshuffle—can potentially impact investor confidence and change the perceived value of a company. In the absence of daily trading volume, these leadership developments may influence future pricing more than current matched trades suggest.
5. Other Factors
- Macroeconomic environment: Broader market conditions—like rising interest rates or a downturn in the tech sector—can affect demand for private company shares.
- Liquidity preference: The presence (or absence) of institutional buyers, who typically seek preferred stock that has liquidity preference over common stock, seeking exposure to private companies in specific sectors (i.e. the artificial intelligence sector) can shape pricing.
- Lockup periods and transfer restrictions: Limitations on when or how shares can be traded may also impact price discovery and investor willingness to engage.
Final thoughts
By understanding the nuances behind highest bid, lowest ask and last matched, you gain a clearer picture of where a company’s shares stand in terms of current market sentiment and value.
When combined with other broader indicators, these pricing metrics help create a more complete picture—empowering buyers and sellers to make better-informed decisions in a market where transparency has traditionally been limited.
P2P Shares offers the tools and data needed to navigate the pre-IPO secondary landscape. To view the active market and access trading opportunities in hundreds of leading private companies please visit P2P Shares website.