Stripe Cuts Valuation to $50 Billion After Facing Fundraising Hurdles

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Stripe has cut the valuation for its multi-billion-dollar fundraising by about 10% to around $50 billion, according to two people familiar with the situation, underlining the challenges that Stripe has faced in completing the fundraising.

While Stripe is still expected to complete the funding round, it is now setting the per-share price at about $20, down from about $23 a share, these people said. The earlier per-share price translated to a valuation of $55 billion, which was already a huge discount to the valuation of $95 billion at which Stripe last raised money, in early 2021.

The Takeaway

Stripe’s proposed valuation is now $50 billion
Some investors have balked at previous $55 billion price
Stripe’s fundraising effort solves employee stock expiration problem

A Stripe spokesperson declined to comment.

Stripe’s fundraising has faced several hurdles, most obviously that the payments firm is raising roughly twice the total amount of money it has raised in its entire life in a difficult investment climate. Also, some investors who have considered investing in the $4 billion fundraising told The Information last week they thought the valuation was too high and they would only invest if it was lower.

Moreover, as The Information reported last week, the fundraising has brought to the surface the most comprehensive details about Stripe’s financial performance. They show that Stripe’s revenue growth slowed sharply last year, as the impact of the pandemic-fueled boom for ecommerce petered out.

At the same time, Stripe burned cash in 2022, the first time that has happened. The cash burn reflects an enormous hiring push made by Stripe since 2022, as its workforce quadrupled to 8,000. As The Information reported on Monday, Stripe’s income measures compare unfavorably to those of Adyen, its publicly-traded rival based in Europe, whose expenses per employee are about half of Stripe’s. Yet Adyen last year generated more revenue per employee than Stripe.

At the same time, while Stripe grew faster than Adyen for most of the past few years, Adyen this year is expected to grow faster. Equity research firm Autonomous Research put out a report this month that said based on Stripe’s profit margins and competition from Adyen, the valuation should be between $45 billion and $55 billion.

Stripe is raising the money to pay a tax bill that will be triggered by Stripe modifying the terms of past employee stock grants, a move which is being done to prevent the stock grants expiring.

Maria Heeter is a New York-based reporter at The Information with a focus on deals and corporate finance. Have a tip? Call or text at 6033197139 (cell, Signal or WhatsApp) or email [email protected].

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.