Back in March In 2021, online payment processing giant Stripe announced it had raised $600 million at a valuation of $95 billion. The numbers made an impression when released months after the deal leaked.
Striking is the Stripe that was raised in early 2021. Some private companies that raised large sums of capital last year have struggled to maintain their valuation — or even their business — in subsequent quarters. This raises an interesting question about Stripe: has the company raised a price it can’t defend, like many other startups and unicorns did last year?
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Until recently, I wasn’t sure, even though I thought about the question every now and then. Thankfully, Stripe released a largely data-free 2021 update letter this month, including: only enough information for us to handle dangerously. With some creative math and, I hope, fair extrapolation, we can derive valuation calculations for Stripe that should help us better understand how well the payment juggernaut masquerading as a private company has priced the price of the latest stock round.
All of our math today will be dated by the time Stripe makes an S-1 filing, but given the lack of recent rumors about it, the company is either on a quiet process or really isn’t that close.
More context for our question about Stripe’s value comes from news a few weeks ago: Fidelity cut the internal valuation of its Stripe stock by 9% from its 2021 level. Was that too much, too soon?
Let’s have some fun with numbers this morning. We’ll start with the company’s newly released processing volume and then go wild. In the breach!
Is Stripe Overrated?
Stripe’s 2021 update — which you can read in its entirety here — includes the following verbiage about its historic and future growth:
Collectively, companies on Stripe processed more than $640 billion in payments in 2021, a 60% increase from the previous year. (Since much of this came from one-time behavioral adjustments caused by the pandemic, 2022 won’t reach the same level of growth.)