Advertisement
Australia markets closed
  • ALL ORDS

    7,899.20
    +33.90 (+0.43%)
     
  • ASX 200

    7,643.60
    +32.40 (+0.43%)
     
  • AUD/USD

    0.6563
    +0.0002 (+0.03%)
     
  • OIL

    76.57
    -2.04 (-2.60%)
     
  • GOLD

    2,045.80
    +15.10 (+0.74%)
     
  • Bitcoin AUD

    77,918.11
    +153.83 (+0.20%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • AUD/EUR

    0.6062
    +0.0003 (+0.05%)
     
  • AUD/NZD

    1.0586
    -0.0002 (-0.02%)
     
  • NZX 50

    11,719.82
    +29.57 (+0.25%)
     
  • NASDAQ

    17,937.61
    -67.09 (-0.37%)
     
  • FTSE

    7,706.28
    +21.79 (+0.28%)
     
  • Dow Jones

    39,131.53
    +62.42 (+0.16%)
     
  • DAX

    17,419.33
    +48.88 (+0.28%)
     
  • Hang Seng

    16,725.86
    -17.09 (-0.10%)
     
  • NIKKEI 225

    39,098.68
    +836.48 (+2.19%)
     

Stripe's internal valuation gets cut to $63 billion

Stripe, a richly valued payments startup, has cut its internal valuation yet again, according to sources familiar with the manner. It is now valued, internally, at $63 billion.

The cut, first reported by The Information, puts Stripe's internal per-share price at $24.71, down 40% since peaking. The 11% cut comes after an internal valuation cut that occurred six months ago, which valued the company at $74 billion.

The valuation change was not triggered by a new funding round, but instead a new 409A price change; 409A valuations are set by third parties, which means that they are not tied to what a venture backer or other investor thinks. It’s an IRS-regulated process that measures the value of common stock against public market comps to help set a fair market value.

Companies are supposed to do a 409A at least every 12 months or when a material event might lower its valuation. In Stripe's case, alongside other late-stage companies, the 409A valuation reviews are now getting conducted on what looks like a quarterly basis. Material events in the background range from the evergreen, and ever-tense, macroeconomic climate; and let's not forget that Stripe's public market comps are certainly showing signs of trouble, with Shopify, Block and PayPal all down from their 52-week highs.

Internal valuation cuts offer a different signal than an investor-led markdown. In fact, many founders and industry experts see a company receiving a 409A valuation that’s lower than its private, investor-led valuation as a good thing. Per analysts, that’s because a low 409A valuation allows companies to grant their employees stock options at a lower price. Companies can also use the new, lower 409A valuation as a recruiting tool, luring prospective employees with cheap options and the promise of cashing out at a higher price when the company eventually exits.

Still, in Stripe’s case, a second internal valuation cut may not necessarily be being used to attract new talent. In November 2022, the fintech laid off 14% of its workforce, impacting around 1,120 of the fintech giant’s 8,000 workers. Back in August, TechCrunch learned that Stripe laid off employees behind TaxJar, a tax compliance startup it acquired last year.

In a memo addressing Stripe’s layoffs, CEO Patrick Collison shared some of his reasoning for the personnel pullback: “We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.” Instead, the valuation cut could help with retention of existing employees, or even adjust expectations ahead of a wishful IPO.