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  • Stripe Internal Valuation Down to $63 Billion • australiabusinessblog.com

Stripe Internal Valuation Down to $63 Billion • australiabusinessblog.com

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.

Shreya has been with australiabusinessblog.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider australiabusinessblog.com, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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