Again in March 2021, on-line fee processing big Stripe introduced that it had raised $600 million at a $95 billion valuation. The numbers made a splash when they were made public months after the deal leaked.
That Stripe raised in early 2021 is notable. Some non-public corporations that raised giant sums of capital final yr have struggled to carry onto their valuation — or even their business — within the ensuing quarters. This raises an fascinating query about Stripe: Did the corporate elevate at a worth that it can’t defend, as many different startups and unicorns did final yr?
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Till not too long ago I wasn’t positive, even when I did take into consideration the query occasionally. Fortunately, Stripe put out a principally data-free 2021 replace letter this month that features simply sufficient data for us to get harmful with. With some artistic math and, I hope, truthful extrapolation, we will derive valuation calculations for Stripe that ought to assist us higher perceive how effectively the funds juggernaut busy masquerading as a non-public firm priced its final fairness spherical.
All our math in the present day will turn into dated the second that Stripe drops an S-1 submitting, however given the dearth of latest rumors to that finish, both the corporate is working a quiet course of or actually isn’t that shut.
Extra context for our query relating to Stripe’s price comes from information a number of weeks again: Constancy cut its internal valuation of its Stripe inventory by 9% from its 2021 degree. Was that an excessive amount of, too quick?
Let’s have some enjoyable with numbers this morning. We’ll begin with the corporate’s newly launched processing quantity after which get wild. Into the breach!
Is Stripe overvalued?
Stripe’s 2021 replace — which you’ll be able to learn in its entirety here — contains the next verbiage about its historic and future development:
Collectively, companies on Stripe processed greater than $640 billion in funds in 2021, up 60% from the prior yr. (Since plenty of this got here from one-time behavioral changes brought on by the pandemic, 2022 gained’t match the identical degree of development.)