With fintech valuations falling, even Stripe isn’t immune to a changing market – Marketingwithanoy

Maybe in the future unicorns will go to the stock market while going to the stock market is possible

Fintech startups are tackling the downturn harder than most other sectors, data shows. So much so that even the largest and best-known private fintech companies suffer embarrassing revaluations.

Data collected by Andreessen Horowitz, a well-known venture capital firm with a history of investing in financial technology – most recently crypto – shows that public fintech companies are suffering from greater valuation declines than other technology categories. At the same time, new information from Fidelity’s various funds indicates that the investment giant has changed its mind about the value of some of the startup’s most flying companies, including Stripe.

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There is a worn chestnut in Silicon Valley that, no matter what the market conditions, the best startups will always be able to recruit. The argument goes that during looser market conditions, as we saw in parts of 2020 and 2021, startups with less core strength will be able to raise capital only to struggle later when the market changes. In contrast, the best startups, regardless of the macro situation, will hook up.

In a sense the saying is a tautology; from Class the best companies have the greatest chance of success – after all, they are the best companies. In another sense, it’s a scary comment. Yes, the best startups can always raise money. But at what price?

What is not being said is the fact that even the private market starters who have garnered the most critical acclaim, valuations, capital and earnings during a boom could endure a price overhaul when the market shifts. That’s what’s going on with Stripe, though we shouldn’t be too shocked given the cyclone of data points supporting Fidelity’s latest. Let’s investigate.

What is Stripe worth?

Let’s start with a broad view of the value of technology companies. The Bessemer Cloud Index has lost more than half its value since late 2021, with the basket of modern software companies falling from a high of $65.51 to just over $30 today. If we fine-tune the market, we could see even greater valuation compression in fintech.

Enter Future, the a16z in-house publication that built it during a flurry of anti-media sentiment among the tech class. According to this piece on the investment group’s blog, valuations of public fintech companies peaked at a multiple of future earnings of about 25x in October 2021. Since then, the same cohort of fintech stocks has fallen to about 4x their future earnings (we read chart, so the data quoted here is more indicative than exact).

Other categories of public tech companies saw sharp declines, such as peak-forward corporate multiples falling from maybe 16x or 17x to about 7x. But no category has held up more since the 2021 bubble burst than fintech. (This is one of the reasons we’re not seeing any fintech IPOs this year, among other contributing factors.)

From that perspective, it’s no surprise to see Fidelity reevaluating its stake in Stripe.

To get an idea of ​​how Fidelity has valued and revalued its Stripe stock over time, we’ll use Business Insider and Bloomberg reporting, as well as filings with the U.S. Securities and Exchange Commission:

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