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Private-market investments can undergo significant changes to their capital structure between the time an investment is made and the point at which shares ultimately become liquid. This becomes particularly important when a private company becomes publicly traded, but the underlying shares held on behalf of WLTH users remain subject to a lock-up, vesting period or other transfer restriction. During this transitional period, there is now a publicly observable market capitalization for the company. However, simply comparing that headline market cap with the valuation at which an earlier private-market investment was acquired may not accurately represent the performance of that position. For this reason, WLTH may display an Adjusted Market Cap for certain assets.

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What is Adjusted Market Cap?

Adjusted Market Cap is a reference value designed to provide a more meaningful comparison between the valuation of an earlier private-market position and the value of the company today. Between an initial private-market investment and an eventual public listing, a company may:
  • Raise additional financing
  • Issue new shares
  • Grant employee or management equity
  • Complete mergers or acquisitions using equity
  • Reorganise or convert different share classes
  • Complete stock splits or consolidations
  • Issue additional shares as part of its public listing
These events can change the percentage of the company represented by an earlier investment. Once the company begins publicly trading, its headline market capitalization reflects the value of the company today, but does not by itself explain the historical dilution experienced by an earlier private-market shareholder. Adjusted Market Cap is intended to bridge that difference.

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Why is this particularly relevant after a company goes public?

When a company becomes publicly traded, WLTH users may not immediately receive or be able to liquidate the underlying shares. Private-market investments can include contractual lock-ups, vesting periods, transfer restrictions or administrative processes that continue beyond a public listing. During this period, the asset may therefore remain visible on WLTH even though the company itself is now publicly traded. This creates an unusual transition: The company has a live public market value, while the user’s position still reflects the economic history of a private-market investment. Using the current public market capitalization alone can therefore create a misleading comparison between the original acquisition valuation and the value of the position today. WLTH may instead display an Adjusted Market Cap that accounts for material corporate actions affecting the underlying position.

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A real-world example: SpaceX

SpaceX provides a useful example of how this can occur. An investor who acquired SpaceX shares while the company was private may naturally compare their original acquisition valuation with SpaceX’s later public market capitalization and expect their investment to have increased by the same proportion. However, important corporate actions occurred between those two points. Most significantly, SpaceX merged with xAI in an equity transaction. New SpaceX equity was issued in connection with that transaction, meaning existing SpaceX shares subsequently represented a smaller percentage of the combined company. SpaceX also issued additional shares as part of its public listing. The creation of new shares further increased the company’s total share count and therefore further diluted the proportional ownership represented by shares acquired before the listing. Other share issuances and corporate actions may also contribute to the overall change in capitalization. None of this means that an existing shareholder’s shares have disappeared. If an investor owned a particular number of SpaceX shares before these events, those shares continue to represent the applicable underlying ownership. What changed was the total number of shares representing ownership of the company. As a result, the percentage of SpaceX represented by each earlier share changed. This means that simply comparing an earlier SpaceX private valuation with its current public market capitalization can overstate the economic performance of that historical position. An Adjusted Market Cap allows WLTH to account for these intervening corporate actions when presenting the position to users.

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A simple illustration

Consider a private-market investment made when a company was valued at $100 billion. Several years later, the company becomes publicly traded with a market capitalization of $500 billion. At first glance, it appears that the company has increased in value by 5x and therefore that every earlier investment should also have increased by 5x. But imagine that, between those two points, mergers and new share issuances resulted in the original shareholders experiencing 20% cumulative dilution. Those shareholders still own their shares, but those shares now represent a smaller proportion of the company. The economic performance of the original investment therefore cannot be understood simply by comparing 100billionwith100 billion with 500 billion. Adjusted Market Cap provides a reference point that accounts for that difference.

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Headline Market Cap vs. Adjusted Market Cap

Where relevant, WLTH may distinguish between two figures: Market Cap The current publicly reported market capitalization of the company. Adjusted Market Cap A WLTH-calculated reference value that accounts for relevant dilution and corporate actions affecting the underlying private-market position. Put simply: Market Cap tells you what the company is worth today. Adjusted Market Cap helps explain what that value means for an earlier private-market position.

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Independently verifiable adjustments

Transparency is fundamental to how WLTH approaches these adjustments. Adjusted Market Cap is not intended to be an opaque internal valuation or discretionary markdown applied by WLTH. Any material adjustment should be based on identifiable corporate actions affecting the underlying company and, wherever reasonably possible, should be independently verifiable by users through their own research. Depending on the company, relevant information may be available through:
  • Regulatory and securities filings
  • IPO documentation
  • Company announcements
  • Merger and acquisition disclosures
  • Published share-count information
  • Financing announcements
  • Fund or administrator reporting
  • Other reliable public or investor documentation
For example, a user researching the SpaceX position should be able to identify the xAI merger, understand that equity was issued as part of that transaction, identify additional shares issued through the public listing, and independently understand how those events affected the company’s capitalization. WLTH’s role is to bring those events together and translate their cumulative economic effect into information that is understandable within the investment experience. Where appropriate, we aim to make the underlying corporate actions and methodology behind an adjustment available to users so that the calculation can be understood and independently assessed.

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Does dilution mean shares have been lost?

No. An adjustment for dilution does not mean that shares have been removed from a user’s position. Dilution occurs because the total capitalization of the company has changed. An existing investor can own exactly the same number of shares before and after a corporate action while those shares represent a different percentage of the overall company. This distinction is particularly important when interpreting investments that have transitioned from private to public markets.

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Why doesn’t WLTH simply use the public share price?

Once a company begins publicly trading, there is an observable market price for its publicly traded shares. However, WLTH users’ underlying private-market positions may still be subject to lock-ups, vesting periods, transfer restrictions, share conversions or administrative processes before they can be distributed or liquidated. During this transitional period, the investment retains a private-market history even though the company now has a public-market price. WLTH therefore seeks to represent the economics of the actual underlying position rather than assuming that the percentage increase in the company’s headline valuation translates directly into the same percentage increase for every historical shareholder. Once applicable restrictions expire and the underlying position reaches its liquidity or distribution stage, the treatment of the asset may change accordingly.

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Improving private-market transparency

The need for Adjusted Market Cap highlights a broader problem with existing private-market infrastructure. Information about financing rounds, dilution, mergers, share issuances, stock splits and other corporate actions can be distributed across issuers, brokers, SPVs, fund administrators, cap tables, regulatory filings and legal documentation. An investor can therefore know the valuation at which they invested and the company’s valuation today, yet still struggle to answer a very basic question: Why is my investment worth what it is worth? WLTH believes this should be easier. Access to private markets is only one part of the problem we are trying to solve. Better access should be accompanied by better information, greater transparency and a clearer history of ownership.
Our objective is for users to understand not only what they own and what it is worth, but how it got there. Adjusted Market Cap is one part of that process. As additional information becomes available from issuers, brokers, administrators, regulatory filings and other reliable sources, WLTH may update historical corporate-action data and Adjusted Market Cap calculations accordingly. Adjusted Market Cap should therefore be understood as WLTH’s best available representation of the economic impact of relevant, independently verifiable corporate actions on an underlying position, based on the information available at the time. For the lock-up and distribution sequence after a listing, see Pre-IPO to Public.