It may have surprised some observers to learn that fintech darling Stripe is weighing up the options for its future direction. A report in the Wall Street Journal indicated on Thursday that the Irish-founded company had told staff it would decide within 12 months whether it would head for the stock markets, or allow staff to sell shares in a private sale.
The potential stock sale is not the surprise – the timing is. Rumours about Stripe’s potential initial public offering have been doing the rounds for years, but this is the closest we have come to a concrete move. And it has only been a matter of weeks since the company began laying off staff, part of a cost-cutting measure that would see up to 1,100 people – 14 per cent of Stripe’s global workforce – leave the business.
The company has not confirmed anything publicly, but it is understood to have brought in outside expertise to help make the decision, engaging JP Morgan and Goldman Sachs to advise.
A lot can happen in 12 months. A year ago Stripe was still riding the crest of the ecommerce wave, before the cost-of-living crisis had really bitten. The company was valued at $95 billion (€87 billion) following a successful fundraising round in 2021 that put it in within reach of hectocorn (a company valued at more than $100 billion) status.
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Fast forward to 2023 and things are different. The ongoing macro economic uncertainty has finally hit the tech sector, resulting in a wave of job losses across the multinationals. Stripe is reported to have cut its internal valuation a number of times. Still, even after announcing cutbacks, the Collison-led operation has continued to build its business, with the most recent announcement about its expanding partnership with Amazon a welcome development.
There is, undoubtedly, a multilayered strategic element to this decision. Tech valuations are reportedly coming under pressure from private sales of stakes, as the lack of IPOs and job cuts make private sales more tempting for those who want – or need – to monetise their shareholdings. Holding out the prospect of a future IPO could make a stake in Stripe more attractive for staff and investors alike.
