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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?
- 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.
- Many top brands use Stripe for their payment processing needs: Walmart, Target, Etsy, Instacart, and Lyft
- 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:
- 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.
- 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.
- 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
- IPOs are risky - Historically, many company IPOs didn't go as well as analysts thought they would.
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