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Stripe cuts internal valuation by 28%

wsj.com

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Re: Stripe cuts internal valuation by 28%

#21

Post by lotsofpulp »

TechBro8615 wrote: post #17
pbreit wrote: post #12

Earlier quoted context omitted.

There are typically two valuations of private companies. The "internal valuation" is usually the valuation of the common shares (ie, those that are granted to employees) whereas the "external valuation" is the value of the "preferred" shares that investors purchase. The external/preferred valuation is usually higher because the preferred shares have more attractive terms (such as that you get your money back first be…

I know this is totally standard and everything, but imagine if we applied this to any other context: - The “internal” assessment of the bridge’s strength, and the external assessment of the people who drive over it - In politics, you have a “public position” and a “private position” Makes you think!

The first one is not analogous since it is not the same bridge. As pbreit pointed out, the terms are different.

The second one is true in any human to human relationship. I would not believe anyone’s outwardly stated thoughts exactly match their internal ones.

Re: Stripe cuts internal valuation by 28%

#22

Post by rco8786 »

bpodgursky wrote: post #19
paxys wrote: post #6

Should 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.

Stripe's growth is still pretty strong. I don't know why you think every tech stock has to move lockstep. Some companies are far better positioned to weather a downturn than others.

So is Square’s growth. When the entire sector you’re in takes a 50%+ dive you have to be pretty naive to think your own valuation shouldn’t do the same.

Re: Stripe cuts internal valuation by 28%

#23

Post by daniel-cussen »

digitalboss wrote: post #18

Journalists don’t really grasp that nuance. ‘Lower Valuation for Popular Company’ is always a good way to get eyeballs.

Sure did grab my eyeball, down round for a company that effectively was invincible--and I met the guy, I met pc (his username here)--but full on unblemished trajectory, totally monotonic. Never heard one bad thing about him, except in my inner monologue like biting the Fruit of the Tree of the Knowledge of Good and Evil, which I do for everyone, and just barely bad, not morally bad, just unfavorable for me in particular, meaningless.

Tells you how hardcore this depression is, more than anything. In particular worse for the companies than for the leaf-node employees.

Re: Stripe cuts internal valuation by 28%

#24

Post by rco8786 »

rvz wrote: post #3

Oh 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 mark…

I don’t envy Stripe’s position. I said as much on Twitter a few weeks ago.

They put off IPO (for some reason), carried a huge internal private valuation, and have 1000s of employees sitting on paper RSUs waiting that IPO. Now it’s going to be either impossible to do or, if they force it, will be at a significant reduction of their private valuation.

Re: Stripe cuts internal valuation by 28%

#25

Post by ProAm »

rvz wrote: post #3

Oh 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 mark…

Why would they need to IPO? Is liquidity stopping them from building anything right now or growing? Why give up any amount of power for a strong private company? Stripe could stay private forever (or 20 years which is the avg lifespan I think of private companies)

Re: Stripe cuts internal valuation by 28%

#26

Post by kasey_junk »

daniel-cussen wrote: post #23
digitalboss wrote: post #18

Journalists don’t really grasp that nuance. ‘Lower Valuation for Popular Company’ is always a good way to get eyeballs.

Sure did grab my eyeball, down round for a company that effectively was invincible--and I met the guy, I met pc (his username here)--but full on unblemished trajectory, totally monotonic. Never heard one bad thing about him, except in my inner monologue like biting the Fruit of the Tree of the Knowledge of Good and Evil, which I do for everyone, and just barely bad, not morally bad, just unfavorable for me in particu…

They didn’t raise at that number it’s just the new 409a value which is fine by a outside firm.

Re: Stripe cuts internal valuation by 28%

#27

Post by borski »

dasil003 wrote: post #11
sparker72678 wrote: post #9

Earlier quoted context omitted.

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.

It only makes the options less valuable if they are actually offering a liquidity event, otherwise it is actually advantageous to employees as any new option grants (both new hire and refreshers) are delineated in dollars, so a lower valuation means they get more of them. I get that this might not align with the perspective of their employees, especially if they skew young and their expectations were shaped by tech s…

For any employees that have already exercised their options, that also means the value of what they thought they were getting just went down.

Re: Stripe cuts internal valuation by 28%

#28

Post by opportune »

toomuchtodo wrote: post #5
asd88 wrote: post #4

$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 v…

BNPL is a feature for large companies to implement themselves or platforms like Shopify, but if you’re not a large company and either not on a platform with BNPL, or like a third party BNPL’s terms better, you’re definitely a target customer for third-party BNPL. So I think third-party BNPL is a legit business though the individual companies have risks of being outmaneuvered or over-reliance on single customers.

I agree with your other points though.

Re: Stripe cuts internal valuation by 28%

#29

Post by rco8786 »

ProAm wrote: post #25
rvz wrote: post #3

Oh 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 mark…

Why would they need to IPO? Is liquidity stopping them from building anything right now or growing? Why give up any amount of power for a strong private company? Stripe could stay private forever (or 20 years which is the avg lifespan I think of private companies)

They’ve hired 1000s of people with promises of an IPO and currently worthless RSUs. They would need to address that with a change in pay structure and likely some large bonuses up front. But otherwise agree with your reasoning.

Re: Stripe cuts internal valuation by 28%

#30

Post by majormajor »

paxys wrote: post #6

Should 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.

I think it's extremely important to note here that June 2020-June 2022 is the bigger aberration for SQ/Block's share price than July 2022.

It's extremely painful to those who bought in, or got granted shares/options, at the super-inflated prices, but it's closer to a "return to normal" than an epic crash so far.

Hopefully that continues and also hopefully people recognize that, so that panic doesn't push things further down.

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