Stripe cuts internal valuation by 28%
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Re: Stripe cuts internal valuation by 28%
#2That’s about 74 billion valuation. FYI.
Re: Stripe cuts internal valuation by 28%
#3Oh dear. Not even Stripe is safe from the market downturn and they are cutting their valuation by 28% - from $98B to $74B.
It's extremely early to write them off but perhaps they should have IPO'd in 2019. Since they didn't, they had to wait it out during 2020, 2021, etc. As long as they are profitable, then they will certainly survive this with ease.
But overall, no-one is safe from this and we will see how the market tests the weakest of companies that are not profitable and completely dependent on constantly raising money.
Re: Stripe cuts internal valuation by 28%
#4$74B is still quite high for the current market
Re: Stripe cuts internal valuation by 28%
#5$74B is still quite high for the current market
The current market so far. Interest rates will rise and CC transactions will migrate over time to less costly rails starting in the next 12-18 months (although Radar, Identity, and other value add products are likely to see continued use and rev growth). Imho, Stripe should've IPO'd at the top ~12+_ months ago.
EDIT: @pbriet (HN throttling, can't reply directly to your comment)
In the US, Zelle does $490B worth of volume annually (2021), all CC networks combined do about $1.9T (2021). That's significant volume for a real time payment system, and it's not even fully baked within the US financial ecosystem. FedNow [1] [2] [3] rails go live next year with instant settlement, moving up to $500k in value for 5 cents (what the bank partner charges the banking customer is up to them). I expect that to move the needle, considering merchants can charge a CC surcharge per SCOTUS' Expressions Hair Design v. Schneiderman (No. 15-1391) ruling. If you compare India's UPI implementation to CC volume, the open platform is fairly successful [4], hence my thesis (and this pattern is repeated, you'll find, across other economies where a low cost real time payment system is present).
CC companies are raising their rates because their margin is soon to be compressed. Ignore BNPL, that's a feature/product masquerading as a business (see: Klarna's down round, Affirms' decline in share price, etc) and regulators are coming for it [5].
TLDR A new fintech product from the Fed is likely to shift higher cost transactions from legacy payment rails to a utility product.
[1] https://www.moderntreasury.com/learn/what-is-fednow
[2] https://frbservices.org/financial-services/fednow/community/...
[3] https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federa...
[4] https://www.business-standard.com/article/finance/upi-most-p...
[5] https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...
Re: Stripe cuts internal valuation by 28%
#6Should be cut by 50%+ to be in line with the rest of the tech market, and even more if you are valuing it as a FinTech company.
SQ is down 75% since its November peak.
Re: Stripe cuts internal valuation by 28%
#7What is an internal valuation, and does Stripe actually lose anything from lowering it? My cynical experience suggests that companies usually have more to gain by lowering their valuation than they do by inflating it.
Apologies if the article already described the possible negative impacts to Stripe caused by a decreased internal valuation. I’m unable to read it since it requires a subscription I cannot afford (due to inflation of course, nothing personal to the WSJ).
Re: Stripe cuts internal valuation by 28%
#8Re: Stripe cuts internal valuation by 28%
#9What is an internal valuation, and does Stripe actually lose anything from lowering it? My cynical experience suggests that companies usually have more to gain by lowering their valuation than they do by inflating it. Apologies if the article already described the possible negative impacts to Stripe caused by a decreased internal valuation. I’m unable to read it since it requires a subscription I cannot afford (due t…
Generally, "Internal valuation" is the valuation used by investors while the company is still private.
One way it can affect Stripe is that it makes stock options less valuable to current employees, and can influence the weight those options have in persuading new hires.
Re: Stripe cuts internal valuation by 28%
#10What is an internal valuation, and does Stripe actually lose anything from lowering it? My cynical experience suggests that companies usually have more to gain by lowering their valuation than they do by inflating it. Apologies if the article already described the possible negative impacts to Stripe caused by a decreased internal valuation. I’m unable to read it since it requires a subscription I cannot afford (due t…
If it's the same valuation used when making offers and refreshers then cutting it will hurt the company.