According to sources with knowledge of the situation, fintech startup Stripe has given itself a 12-month deadline to go public, either through a direct listing or by pursuing a transaction on the private market, such as a fundraising event and a tender offer. The news, which was first reported by the Wall Street Journal, is unexpected given the tech industry’s generally dull public market activity.
Regarding the deadline or the current revenue, Stripe declined to make an on-the-record comment.
The fact that the massive payments company is looking into exit strategies is not entirely unexpected given that it was founded in 2010. Stripe, which was most recently valued at $95 billion, has not escaped the effects of the global recession, though. It let go 1,120 employees, or 14% of its workforce, in November. Additionally, over the past year, the company has reduced its internal valuation multiple times. This month that Stripe had reduced its internal valuation to $63 billion. The company’s internal valuation was reduced by 11% six months earlier, valuing it at $74 billion.
The Journal reports that Stripe has retained Goldman Sachs and JP Morgan to assist it in determining which course of action is best for the business.
Stripe, which was founded in Ireland by brothers John and Patrick Collison (the CEO), raised its last round of venture capital in March 2021, for a total of $600 million, which resulted in a valuation of $95 billion. Two significant insurance companies provided support for that financing. Along with Baillie Gifford, Fidelity Management & Research Company, Sequoia Capital, and an investor from the founders’ country of Ireland, the National Treasury Management Agency, Allianz and Axa, through their respective Allianz X funds, took part in the round (NTMA).
According to Forbes, Stripe generated $12 billion in gross sales and achieved EBITDA profitability in 2021. According to the company, its products “power everything in between,” including payments for online and offline merchants, subscription businesses, software platforms, and marketplaces.
The general stock market volatility that has plagued stocks over the past year has prevented late-stage tech companies from making their public market debuts in large numbers. Has Stripe missed the window to go public, or is it setting a precedent that other industry giants will follow? I suppose that’s what it’s attempting to determine.