Dublin- and San Francisco-headquartered fintech company Stripe has previously indicated that it is in no rush to go public. The Stripe IPO might happen in late 2022 or not at all. But experts predict a public offering as the startup’s stock awards to some of its early employees face a 2023 deadline.
One of the world’s leading players in online payments, Stripe was founded by brothers John and Patrick Collison. In their last round of funding, Stripe valuation stood at $95 billion. If the company decides to go public, it could fetch an even bigger offering. The Stripe IPO can also help early investors and employees cash out their stakes. It has been one of the most awaited, upcoming IPOs of 2022.
The Stripe IPO
The market is currently saturated with many fintech players. Another player set to make an IPO is Klarna, in the buy now, pay later segment. Stripe’s services are used by millions of businesses across the globe, and the company offers everything from tax assistance to buy now, pay later schemes.
The payment processing firm was started in 2010 by the Collison brothers in San Francisco, California. The company received its first investment from multiple established investors, including PayPal co-founders Elon Musk and Peter Thiel.
A Stripe IPO could raise its valuation to well over $100 billion but the present bear market has made risk-averse Wall Street weary about investing in IPOs. Stripe’s customers include companies like Zapier, Slack, Google, Instacart, Amazon, and Shopify. It also has a presence in over 120 countries and is well-known for its service that removes compliance and regulatory burdens from clients.
Since 2010, Stripe has had 10 fundraising rounds and managed to raise around $2.2 billion. The company also had revenues of over $12 billion in 2021, up from $7.4 billion in 2020.
In July 2021, a report by Reuters suggested that Stripe is moving towards an IPO after it engaged the services of a law firm.
A Risky Bear Market
In July 2022, The Wall Street Journal reported that the internal Stripe valuation had taken a beating, falling to $29 from $40. As market conditions change due to an unstable geopolitical climate and upcoming interest rate hike, Stripe’s valuation could suffer.
The company has not filed for Stripe IPO and there is no news about a possible debut date. As tech stocks face an unprecedented crisis, Bloomberg’s Billionaire Index, which tracks the wealth of the biggest names in business, estimated the Collison brothers’ fortunes at $8.29 billion each, down from the $11.4 billion each it had allotted in July. Along with their personal fortunes, Stripe’s valuation is also estimated to have gone down to $74 billion from the eye-popping $95 billion investors had predicted.
Bloomberg reported that the record-high inflation in the US has substantially slashed the net worth of tech billionaires, as the market grapples with rising uncertainty. To make matters worse, threats of an expected recession have negatively impacted stocks, making 2022 one of the worst times for an IPO debut.
The changing market conditions call for people to reevaluate their concerns on whether Stripe’s glory days have come and gone. Recent reports reveal that stocks that made their debut in 2021 are trading for nearly half their IPO price this year.
Worried investors have also taken to investing in financial instruments with assured returns and low risk profiles. Furthermore, it is unclear how much of the financial boom is a result of the pandemic and how it will perform in post-pandemic conditions. As institutional financers start expanding their offerings, newer companies could face the heat as competition heats up.
“The global growth story is in shambles right now,” Ed Moya, a senior market analyst at Oanda, told CNBC. “That’s what’s really kind of weighing on risk appetite right now because you can’t have the US continue to be attractive while the rest of the world is crumbling.”
For now, there is no due date for the Stripe IPO, neither has the company made any concrete statements on when to expect it. You will have a better idea ocne the company files the required documents with the SEC.
