Stripe: valuation in free fall, despite raising $6.5 billion

Despite a change in investor sentiment, Stripe has managed to raise more funds than estimated in February. This fundraising, will pay for free shares and stock options of employees, before the expiration date.

FACTS 

• Stripe said it raised $6.5 billion, up from $4 billion expected in February.

• On the other hand, the company's valuation will drop from $95 billion in 2021 to $50 billion today :

  • Internally, the company had already significantly reduced its valuation to $60 billion.

  • However, with a valuation of $50 billion, the payment company is still three times more valued than a bank like Société Générale.

• In 2022, Stripe recorded:

  • $816 billion in payment volume,

  • 14.3 billion in revenue (up 25% year-over-year, but down from 54% in 2021),

  • 14% of its workforce cut by the end of 2022, or 1,000 positions at its San Francisco and Dublin locations,

  • The company expects to turn a profit in 2023.

CHALLENGES 

• A change of mindset of investors : if last year they were willing to pay 40 times the company's profit, now this multiplier is only 20.

• Free shares & stock options as a lever for acquiring new talents : this strategy allows to attract the best talents and to keep them motivated. But it comes at a cost. In 2023, Stripe needed cash, the player had to pay several billion in free shares and stock options to its employees, and several billion to finance the associated taxes.

• The ripple effect of the pandemic : after a meteoric acceleration of ecommerce in 2020 and 2021 that boosted Stripe's operations. Inflation decided otherwise, affecting consumption on the one hand and driving up interest rates on the other. Significantly impacting startup and technology funding.

MARKET PERSEPCTIVE 

• Stripe has raised a total of $8.7 billion since its inception in 2011 (including two rounds of $600 million, in 2020 and 2021). Stripe is once again supported by its historical investors: Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, and Thrive Capital. And new ones: GIC, Goldman Sachs Asset and Wealth Management and Temasek.

• Stripe recently announced that it is using Chat GPT-4 to support its support and fight fraud. Artificial intelligence makes it possible to: 

  • Make it easier to support users, removing the need to parse web pages and summarizing their activity "beyond human handwriting."

  • provide appropriate answers to developers with technical questions by interpreting issues and rephrasing documentation,

  • On Discord, Stripe uses ChatGPT to analyze message syntax and identify suspected fraudulent accounts: specialized teams can then perform human authentication to assess risk and combat fraud.