Stripe Plans to Go Public in Next Year or Make a Deal to Resolve Employee Stock Squeeze

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Stripe plans to either go public or make a deal that will allow employees to sell stock within the next year, the company told employees and investors Thursday, moves that would be aimed at easing a looming stock crunch for some veteran employees.

The company is considering both a direct listing and a private-market transaction that would give employees liquidity in the next 12 months, according to an email sent to employees. Stripe scheduled a company all-hands for Friday to discuss the options. The company hired Goldman Sachs and JPMorgan to help drum up interest from investors.

The potential maneuvers are aimed at resolving a lingering problem for Stripe: Some of its veteran employees hold restricted stock units due to expire soon, meaning a big piece of their compensation could evaporate without action from the company. The Information first reported about the impending stock squeeze for employees in September.

The process is more likely to result in Stripe raising new capital privately, rather than a public offering, two people familiar with the matter said.

The Takeaway

Stripe plans to go public or allow employees to sell stock within the next year. Two people familiar with the matter say the move is more likely to result in Stripe raising new capital privately, rather than a public listing.

Stripe declined to comment.

"Our vision is to offer predictable, ongoing liquidity, at market prices, to current and former Stripes," the company said in an email to former employees. "Doing so as a public company is the most common path, and while it remains the default outcome, we're going to assess both private and public options for enabling effective and orderly trading of Stripe's equity."

Stripe has seen its business slow and its internal valuation slide amid a drubbing in tech stocks, after investors in March of 2021 valued the company at $95 billion. The company has estimated that its own stock price has fallen by about one-third since then, implying a $63 billion valuation, The Information reported this month. That price cut is roughly in line with how far the stock of its closest publicly traded competitor, Adyen, has fallen over that period.

Stripe has been hurt by a slowdown in e-commerce sales last year, which have hit some of its big customers such as Shopify and DoorDash. The South San Francisco-based firm cut 14% of its staff in November.

The company has long been a darling of IPO market observers. If it had gone public at its peak valuation, it would have been one of the biggest debuts in U.S. listing history. At 13 years old, it’s a thoroughly mature startup – it would be going public later than Airbnb, which waited 12 years, and Uber, which waited 10 years. Facebook was just eight years old when it went public in 2012.

Meanwhile, the IPO market remains frozen, owing to a stock-market volatility and a sharp drop in tech-company valuations. IPO bankers, lawyers and investors have told The Information that things in the IPO market could heat up in the second half of 2023.

Moving forward, Stripe will issue single trigger RSUs which vest over time, according to the email. Stripe previously issued double-trigger RSUs which also required that the company go public for its RSUs to vest.

Stripe has raised about $2.2 billion in venture capital over its history, according to PitchBook, from investors such as Sequoia Capital, Founders Fund and General Catalyst. In a November email to Stripe employees viewed by The Information, CEO Patrick Collison said the company had “consumed less than $150M after 12 years of operation,” referring to the company’s cash burn.

Cory Weinberg is deputy bureau chief responsible for finance coverage at The Information. He covers the business of AI, defense and space, and is based in Los Angeles. He has an MBA from Columbia Business School. He can be found on X @coryweinberg. You can reach him on Signal at +1 (561) 818 3915.

Becky Peterson is a reporter at The Information based in New York City covering Tesla, SpaceX and all things Elon Musk. Contact her at [email protected].

Jessica Lessin founded The Information in 2013 after reporting on Silicon Valley for the Wall Street Journal. As The Information’s editor-in-chief and CEO, Jessica leads the company in its quest to deliver the most valuable technology and business journalism in the world. She regularly writes about all things tech and media. She can be found on X at @jessicalessin.