Stripe Cuts Internal Valuation by 28%
Payments processor was last valued by private investors at $95 billion
Payments giant Stripe Inc., last valued by private investors at $95 billion, cut the internal value of its shares by 28%, people familiar with the matter said.
Stripe told employees in an email Friday that the internal share price was about $29, compared with $40 in the most previous internal valuation, known as a 409A valuation, the people said. The move lowered the implied valuation of those shares to $74 billion, according to one of the people, which is calculated separately from the stock owned by major shareholders.
Stripe said in the email that the board approved the lower share price effective June 30, the people said. The payments processor to startups and fast-growing internet companies didn’t explain the decision to lower its internal valuation, the people said.
The decision comes amid a prolonged market selloff that has slowed down the pace of private fundraising and pushed startups to slash costs and cut jobs.
Last year, Stripe became one of the most valuable U.S. startups after raising a $600 million round at a $95 billion valuation. But the share prices of publicly traded fintech companies have plummeted in the past few months, making Stripe look overvalued. Payments processor PayPal Holdings Inc., which investors often compare to Stripe, has seen its stock decline by over 60% since Jan. 1.
Private companies often update their 409A valuation to more appropriately assess the best price to issue new stock options to employees. The metric is separate from the valuations investors assign to startup shares, which is usually based on the price of the last financing round but can change based on changes in a company’s performance or external market shifts.
Stripe isn’t the first high-profile startup to lower its 409A valuation. Earlier this year, Instacart Inc. marked down its internal valuation to $24 billion from $39 billion, a decision the company said it made to help with retention and recruiting.