Stripe Cuts Internal Valuation by 28% To $74 Billion

Payments giant Stripe, last valued by private investors at $95 billion, cut the internal value of its shares by 28%, WSJ reported Thursday, citing people familiar with the matter. From the report: 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.

Are workers still getting paid in stock?

[fermion]

If so is this just a ruse to get employees to leave?

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[timeOday]

Percentage-wise it's only a moderately more severe reduction than the S&P500 overall, so it would seem more fishy to me if they clung onto the previous valuation.

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[luvirini]

And given that Fintech is hit even more hard than S&P overall, cutting by more also makes sense in that way..

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[dskoll]

It's a private company, so if workers are getting stock or stock options, the real value is essentially unknown. It's only once the stock can be sold on the open market that its value becomes apparent.

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[Comrade Ogilvy]

The IRS will expect a good faith estimate when employees acquire stock.

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[bn-7bc]

but do the eploees get stock or stock options, i seam to remember that geting options (in this case call options) is preferable from a tax standpoint as these ar usually prised lower than stocks esp if the mature a in a few years. also if on ore more employs for one reason or the other forget to exsersise the option bofore the expiery date the company still owns the stoc

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[Comrade Ogilvy]

If stock is given out or options are exercised, the IRS we want a reasonable good faith evaluation of how much value exchanged hands. That it is a private company does not matter. Also, a stock option has to have some kind of exercise price.

Clinging to an unrealistic high figure is likely to piss off employees in various ways, most especially the executives who have the most paths towards acquiring stock. Clinging to a high internal valuation will also annoy potential investors.

Re:Are workers still getting paid in stock?

[MachineShedFred]

Nope, it's probably forward looking to their next round of raising capital from VCs - if they lower their valuation previous to seeking a funding round, it's seen as being real. If the lowering of their valuation comes off of a term sheet, then it's a "down round" which is a death knell for many companies.

Not traded publicly = no value at all

[thesjaakspoiler]

I had to learn that the hard way.
My company was merged and my $2 million stock package was suddenly worth $2000.
As long as you cannot convert your stock(options), they have as much value as a Pokemon card.

$74,000,000,000.00 for a fancy payment processor

[LibberGeek]

Stripe is truly great. But how much revenue? 740,000,000 boxes of Ziti is a LOT of ziti.