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

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

The valuation change was not caused by another round of financing, but instead by a new 409A price change; 409A valuations are determined by third parties, meaning they are not tied to what a venture backer or other investor thinks. It is an IRS-regulated process that measures the value of common stock against public market comp to determine a fair market value.

Companies are expected to conduct a 409A at least every 12 months or whenever a material event could lower their valuation. In Stripe’s case, its 409A valuation reviews, alongside other late-stage companies, are now conducted on what appears to be a quarterly basis. Background material events range from the evergreen and ever-tense macroeconomic climate; and let’s not forget that Stripe’s public market compositions are definitely showing signs of trouble, with Shopify, Block, and PayPal all down from their 52-week highs.

Internal valuation downgrades send a different signal than an investor-led downgrade. In fact, many founders and industry experts view a company receiving a 409A valuation lower than its private investor-led valuation as a good thing. Analysts say 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 rating as a recruiting tool, enticing potential employees with low-cost options and a promise to pay out at a higher price when the company eventually leaves.

Still, in Stripe’s case, a second internal valuation cut doesn’t necessarily have to be used to attract new talent. In November 2022, the fintech laid off 14% of its workforce, affecting about 1,120 of the fintech giant’s 8,000 employees. In August, australiabusinessblog.com learned that Stripe laid off employees behind TaxJar, a tax compliance startup it acquired last year.

In a memo on Stripe’s layoffs, CEO Patrick Collison shared some of his reasons for the staff pullback: “We were far too optimistic about the near-term growth of the Internet economy in 2022 and 2023, underestimating both the likelihood and the impact of a wider delay. Instead, the valuation cut could help retain existing employees, or even adjust expectations ahead of a desired IPO.