What’s the difference between internal and external valuation?
Stripe cuts internal valuation by 28%
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Re: Stripe cuts internal valuation by 28%
#72Remember that Stripe changed its RSU grant structure a year or so ago, so this won’t negatively affect newer employees. Stripe gives out a fixed amount of $$ value of stock each year now. The typical recent senior hire will get around $200k a year in stock. Now that the valuation is lower, they’ll be granted more stock units than before, which is good. Getting granted fewer stock units at a ‘fake’ higher valuation wo…
This is why many Stripes on blind are not angry. They will get more shares next year.
Re: Stripe cuts internal valuation by 28%
#73Earlier quoted context omitted.
If it’s RSUs why are they worthless?
Because they can't be sold right now. And the future date at which they could be sold is undetermined and doesn't appear to be any time soon.
Please feel free to send any worthless Stripe RSUs my way. I've been looking for a way to pay someone for some of them for the better part of a decade at this point.
Re: Stripe cuts internal valuation by 28%
#74Earlier quoted context omitted.
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.
If they believe in their valuation why shouldn't they just IPO? Is it really gonna matter if they IPO at 100B or just 60b? And if they are in fact a 100B company then supposedly at some point the public market should price them "correctly".
Right. Exactly.
Especially as, very likely, a person choosing to work there likely believes in the business to some extent.
The counter argument would be: “the moment these get liquid I’m selling, then quitting to pursue XYZ thing” in which case the potentially lost half decade of time is a big non financial cost.
Re: Stripe cuts internal valuation by 28%
#75Earlier 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!
I don't think it's as nefarious as that. What people are calling the "public" position here is the value of preferred stock sold in a financing, and the "internal" valuation is the value of common stock. They're different things - the preferred stock has downside protection and other special rights that make it more valuable than the common stock so it should have a different price. These internal valuation reports pretty explicitly calculate the value of the common stock as a discount applied to the preferred stock price, due to the rights and liquidation preferrence and the fact that the common is not freely tradable.
Re: Stripe cuts internal valuation by 28%
#76$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…
I work in payments. Can you help me understand how fednow is a threat to credit card transactions? Who even benefits from credit card transactions outside of the credit card user and the network? So what is actually being threatened?
Re: Stripe cuts internal valuation by 28%
#77Earlier quoted context omitted.
Because they can't be sold right now. And the future date at which they could be sold is undetermined and doesn't appear to be any time soon.
What does that have to do with the valuation getting lowered? If a person had 1000 RSUs that were on paper worth 40k, now they are worth 30k. Either way they can’t be sold right now. And I don’t understand how 30k is “worthless”
Because they can't be sold. If Stripe never goes public they will never be worth anything. It's funny money until you sell it.
Re: Stripe cuts internal valuation by 28%
#78Earlier quoted context omitted.
Can you clarify? How is $200k worth of something ever "worthless"?
how is something worth $200k if you can't sell it?
I assure you, you will have no trouble selling Stripe stock at what its worth. There is a big appetite for Stripe shares in the secondary markets even if the company never goes public.
Re: Stripe cuts internal valuation by 28%
#79Earlier quoted context omitted.
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…
I work in payments. Can you help me understand how fednow is a threat to credit card transactions? Who even benefits from credit card transactions outside of the credit card user and the network? So what is actually being threatened?
I work adjacent to payments in fintech. I’ve had conversations with largish merchants who have mentioned their intent to attempt to move payment flow to these new rails when available to reduce CC processing costs. Will they? I cannot say for sure, I speak the lens I see through. A real recent quote from a CFO: “why am I handing over 2% of my revenue just to take a payment if I can avoid it?”
Re: Stripe cuts internal valuation by 28%
#80Earlier quoted context omitted.
How would you sell it for a loss?
If you are accepting stock or stock options as compensation, that's generally coming in lieu of cash. Maybe you had an offer somewhere else with $30k more in salary, but you took this offer instead because the projected value of the stock made the total compensation higher. If you sell your stock after 4 years for $50k, you have taken a $70k loss relative to the other offer.
I’d love to count profits and losses relative to the best possible outcome in hindsight rather than the difference between what was spent to obtain an asset vs. what I got for it, but generally that’s not how the IRS sees things. A loss is not relative like that.