LONDON, March 16 (Reuters Breakingviews) - Stripe’s valuation cut is arguably still a relative sign of strength. The privately held payment startup co-founded by brothers Patrick and John Collison said late on Wednesday it raised over $6.5 billion from existing and new investors in a funding round that values it at $50 billion. The newly attained price tag is a 47% cut from its 2021 valuation of $95 billion. And by some metrics Stripe seems to be valued at a discount relative to its publicly listed peers. Stripe’s $50 billion is 3.5 times last year’s gross revenue, while Dutch payment firm Adyen (ADYEN.AS) trades on a multiple of 4.7 times.
The valuation cut reflects the reality of how an economic slowdown affects fintech businesses like Stripe. But it’s somewhat less than the 85% hit to Swedish fintech peer Klarna’s valuation last May. And raising $6.5 billion following a funding crunch and the collapse of Silicon Valley Bank arguably shows the strength of the business. It’s the largest private fundraising for a U.S. company ever. None of the public market listings so far this year managed to raise as much: top of that list is American Water Works (AWK.N), which raised just $1.7 billion through a public listing, according to Dealogic.
Stripe also didn’t dilute existing shareholders, like Andreessen Horowitz and Thrive Capital, and managed to add new ones such as Singapore’s Temasek and GIC. None of the money, meanwhile, is intended for Stripe’s corporate coffers: a big chunk is just to pay a tax bill for its employees. Rival tech companies’ main sentiment may well be envy. (By Karen Kwok)
(The first paragraph has been corrected to reflect that Stripe’s valuation cut was 47%, not 53%.)
Follow @Breakingviews on Twitter
Capital Calls - More concise insights on global finance:
Larry Fink finds way to dodge ESG crosshairs read more
UK’s pension fix uses sledgehammer to crack nut
Gig workers still pose roadblock for Uber and Lyft read more
Meta wants cartoons, just not cartoon apes
Ritchie founder perfects disappointed dad routine read more
