• Stripe, an Irish-American financial services and SaaS company, has received its second valuation cut in 6 months.
• The latest valuation pegs the company’s internal value at $63 billion after an 11% cut in its share price.
• The valuation was done through a third-party estimation using a benchmark of factors determined by the Internal Revenue Service (IRS).
Irish-American financial services and SaaS company Stripe has received its second valuation cut in 6 months, a sign that the fintech ecosystem is yet to recover from the underlying strain in the sector across the board. As reported by The Information, the latest valuation pegs the company’s internal value at $63 billion after an 11% cut in its share price.
In reaction to the current market outlook, in November last year, Stripe laid off as many as 1,120 of its workers. As a private entity, Stripe’s valuation is not determined by its market capitalization, but rather by funding rounds or a third-party estimation using a benchmark of factors. This estimation was done through the 409A price change, which is done by third parties under the rules set by the IRS.
The industry has suffered multiple rounds of layoffs since the start of 2020. In the beginning of the pandemic, Stripe had to cut down 10% of its workforce. As the situation worsened, it had to let go of another 20% of its workforce. This is indicative of the strain the industry is facing and how it is struggling to cope with the current market conditions.
Despite the recent cut in valuation, Stripe remains one of the most valuable companies in the industry. It is currently one of the most well-funded companies in the sector and has raised over $5 billion in capital. It is also one of the most successful financial technology firms in the world, with an expansive network of over 20 million users across the globe.
The financial technology sector is in a phase of transition as it looks to adjust to the current state of the market. Companies like Stripe are the ones leading the charge and setting the trends for the sector. As the market recovers, it is expected that the industry will rebound and the valuation of companies like Stripe will return to pre-pandemic levels.