• Stripe, a 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 the 409A price change, a third-party estimation using a benchmark of factors.
Stripe, an Irish-American financial services and SaaS company, has faced tough times lately. In November last year, the company made the difficult decision to lay off 1,120 of its workers as a reaction to the current market outlook. Now, the fintech giant has received its second valuation cut in 6 months, a sign that the sector is yet to recover.
The latest valuation pegs the company’s internal value at $63 billion after an 11% cut in its share price. Unlike publicly listed companies whose valuation can easily be showcased through their market capitalization, the case is different for private outfits like Stripe. Rather than depend on the market capitalization of its stock, private entities get valued after a funding round or through a third-party estimation using a benchmark of factors.
The estimation for Stripe’s valuation was done through the 409A price change, which is a method regulated by the Internal Revenue Service (IRS). This method sees third parties assess a company’s internal value by taking into account a number of financial and non-financial factors. These factors, which can include the company’s financial performance, its competitive landscape, and its future growth potential, are used to provide an accurate assessment of the company’s worth.
For Stripe, the process of being valued has been a difficult one. In addition to the 11% cut in its share price, the company has also seen its market value decline by $7 billion since its last valuation in December. This decline is a further indication of the struggles currently facing the tech sector, and a sign that the recovery process could take some time.
Despite the challenges, Stripe remains one of the most successful companies in the fintech space. With its innovative products and services, the company continues to be a leader in the field and is likely to continue to receive investment from venture capitalists and other financial institutions. Ultimately, Stripe’s current valuation cut may be a sign of a difficult period for the industry, but it is unlikely to have a major impact on the company’s long-term success.