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Stripe IPO: Everything You Need to Know

Today, the world is more connected than ever. Thanks to advancements in technology, we have access to a wealth of information at our fingertips. As the era of e-commerce has evolved with the growth of online shopping, so too has the ways investors look at companies. In an era where venture capital funding for tech startups is at an all-time high, companies that can navigate this new landscape and succeed will be rewarded handsomely for their efforts. And one of those companies is Stripe.

What does Stripe do?

Stripe is a San Francisco-based payment platform that enables businesses to accept payment from customers for their goods and services. Founded in 2010 and launched in 2011, Stripe provides its customers with a straightforward and simple way to process payments through an API. This allows businesses to create "on demand" payments with the company’s software, which can be integrated into websites and mobile applications for easy setup. People use their service to process credit card transactions and bank transfers. They support over 135 currencies across 40+ countries. The company has been growing rapidly since its inception, with revenue increasing from less than $50 million in 2016 to over $12 billion in 2021. Stripe offers both a subscription product as well as a software development kit (SDK) that can be used for building apps and websites that accept payment through Stripe.

When is the Stripe IPO Date?

It's very possible that Stripe could be going public some time in 2023 but no date has been set. The company did file to go public with the Securities and Exchange Commission (SEC) in July 2021. As of Oct. 2022, the company has raised more than $2.2 billion and has more than 3.1 million customers using its technology. As the company has been around for more than 12 years, shareholders are hoping for an IPO soon which could mean, assuming market conditions get better, an IPO very soon.

How Much is Stripe Worth?

The last reported valuation was around $95 billion but due to market conditions, the valuation was reportedly cut by 28% to $74 billion.

Why Potentially Invest in the Stripe IPO?

1. Huge, growing market with lots of room. Over the last 5 years, there has been a boom in new online businesses and many offline businesses come online. Stripe is the first choice for many when it comes to payment processing and many of these businesses will utilize Stripe for their payment processing needs.
2. Many top brands use Stripe for their payment processing needs: Walmart, Target, Etsy, Instacart, and Lyft
3. Expanding opportunities. While Stripe started out with payment processing, they have expanded to offer all kinds of other services (e.g. subscription billing, card issuing, business capital). Given their large customer base, they can build new technology to serve their customers and make more money on those services.

Why Not Invest in the Stripe IPO?

Aside from their quite high valuation (which might be warranted assuming revenue to back it up), there are a few things to consider before investing:

1. Competition - Competitors like Paypal and Block have lots of capital and customers and could innovate and aggressively capture the growing market as well as take away market share from Stripe.
2. The growth of new online business creation and offline businesses coming online may slow which could create an even more competitive landscape for all players in the space. Stripe may need to spend even more trying to capture these businesses which could become unsustainable.
3. Market conditions - rising interest rates, global supply chain shortages, potential for war, and other factors could affect valuations across the board and hurt new public market entrants even more
4. IPOs are risky - Historically, many company IPOs didn't go as well as analysts thought they would.

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Unity Company Brief

Unity is the world’s leading platform for creating and operating interactive, real-time 3D content. They are going public on 9/18/2020. If you are interested in investing in Unity, we have read through their S-1 and compiled a simple brief below outlining what we think you should know. This is for informational purposes only and does not constitute investment advice.

Company Details:

Technology Sector: Focuses on development and distribution of games through the development App Unity.

People:

CEO: John Riccitiello

About: American business executive who is chief executive officer of Unity Technologies. Previously, he served as CEO, chief operating officer and president of Electronic Arts, and co-founded private equity firm Elevation Partners in 2004.

Offering Size & Company Valuation – Add on Offering of:

Shares Issued: 25,000,000

Additional 3,750,000 available to underwriters

Price: $34 - $42

Valuation: $850m - $1,207.5m

Common stock to be outstanding after offering: 263,366,733 shares

Emerging Growth Company: less than $1.07 billion in revenue during the last fiscal year, UNITY qualifies as an “emerging growth company” – Due to this > they have reduced and limited reporting and disclosure requirements about operations and financial activities.

Proceed Use:

- General corporate purposes, including working capital, operating expenses and capital expenditures.

- Repay the outstanding $125 million of indebtedness under our credit facility.

- acquisitions of, or strategic investments in, complementary businesses, products, services or technologies

Quick over View:

• Our platform provides a comprehensive set of software solutions to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices.
• Crowd source developers around the globe to continuously generate and produce gaming content
• Own app UNITY > provides access to games developed.
• Popular Games: Playrix, Moon, FallGuys: Knock Out
• estimate that in 2019, on a
• Growth
• Global basis, 53% of the top 1,000 mobile games on the Apple App Store and Google Play and over 50% of such mobile games, PC games and console games combined were made with Unity
• Risk
• Major portion of revenue comes from end-users who download and play the games developed by the platform
• Inability to scale or enter new markets
• Company operates at a loss, and may not become profitable

Product: Unity Development platform

• Create Solutions: Used by content creators/developers/designers/engineers/architects – to create interactive 2D & 3D content
• Operate Solutions: offer consumers the ability to grow and engage their end-user, as well as monetize their content

Generate Revenue:

• Create Solutions: Monthly subscription based solution
• Operate Solution: revenue share and usage based model
• Revenue generated from the developers who build and create

Growth Projection:

2018-2019: revenue of $541.8m – reflects a growth of 42% year-over-year

Generate Loss: of $131m

Market Opportunity

$29 billion market across both gaming and other industries. Create Solutions and Operate Solutions estimated: $12 billion in 2019 across over 15 million potential creators, growing to over $16 billion in 2025,

• Industries Beyond Gaming: In industries beyond gaming, we estimate the market opportunity for our Create Solutions and Operate Solutions to be approximately $17 billion today, based on the number of software developers, architects and designers the solutions could potentially serve.

Looking to the future, maybe large opportunities within and beyond the industries and use cases we currently serve that are not captured by the above market opportunity estimates.

• Gaming: We believe there is a large future opportunity for Unity in gaming that is not captured by the above analysis. Goal to expand the applicability of our platform to creators with new solutions we are designing for the future, such as assisted artistry workflows, higher performance rendering capabilities and additions to our Operate Solutions.

• AR & VR: We are the leading platform for creating content for augmented reality and virtual reality applications, which we believe will represent large opportunities for our business in the future as innovations in hardware and connectivity increase capability and drive adoption.

• Industries Beyond Gaming: There are 37 million engineers and technicians, based on data published by Cambashi, who could be additional users of various current and future products that comprise our platform

UNITY Benefits:

Our Platform Our core competitive strength is the breadth and depth of our platform. We offer a comprehensive set of solutions to create, run and monetize real-time 3D games and applications. Creators can onboard through any of our solutions and leverage our platform to serve their needs at every stage of growth.

Market leader for the creation of all types of video games, ranging from games developed by the largest global publishers, including AAA studios, to games developed by mid-sized, small and independent developers and freelancers

Invested over $450 million in research and development over the last two fiscal years alone to further develop our solutions

Data Analytics: Our scale affords us access to a vast amount of end-user engagement and platform performance data. We continuously capture and analyze valuable end-user behavior and application performance data from over 50 billion in-app events per day across over 20 different platforms as end-users interact with games and applications made with Unity.

Risk Factors:

• We have a history of losses and may not achieve or sustain profitability in the future.
• We have a limited history operating our business at its current scale, and as a result, our past results may not be indicative of future operating performance.
• Our business depends on our ability to retain our existing customers and expand their use of our platform. If we are unable to attract new customers, our business, financial condition and results of operations will be adversely affected.
• We derive a significant portion of our revenue from our Operate Solutions. If we fail to attract and retain Operate Solutions customers, our business and results of operations would be adversely affected. Operating system platform providers or application stores may change guidelines or technical requirements to require us or
• If we are unable to further expand into new industries, or if our solutions for any new industry fail to achieve market acceptance, our growth and operating results could be adversely affected, and we may be required to reconsider our growth strategy.
• Our business relies on strategic relationships with hardware, operating system, device, game console platforms and other technology providers. If we are unable to maintain favorable terms and conditions and business relations with respect to our strategic relationships, our business could be harmed.
• If we do not make our platform, including new versions or technology advancements, easier to use or properly train customers on how to use our platform and solutions, our ability to broaden the appeal of our platform and solutions and to increase our revenue could suffer.
• Interruptions, performance problems or defects associated with our platform and solutions may adversely affect our business, financial condition and results of operations.
• The markets in which we participate are competitive, and if we do not compete effectively, our business, financial condition and results of operations could be harmed.
• After this offering, and based on 238,366,733 shares outstanding as of June 30, 2020, our executive officers, directors and greater than 5% stockholders, in the aggregate, will beneficially own approximately 62% of our outstanding common stock and, if they choose to act together, will continue to have the ability to control or significantly influence all matters submitted to stockholders for approval. Furthermore, many of our current directors were appointed by our principal stockholders.