Stripe was one of the most valuable private companies in the world, with a valuation of over $95 billion. The online payment processing company has been around since 2010, and it has seen tremendous growth in the last decade.
The company is reportedly in talks with investors to raise $4 billion at a valuation of about $55 billion, which is lower than its previous valuation of $95 billion.
These funds will be used to enable veteran employees to sell stock that is now restricted so that it can pay the taxes it will incur by doing so, according to the report. The latest capital raise from investors including Thrive Capital reported by TOI
So you might be wondering why Stripe hasn't gone public yet, Here are a few reasons:
1. Avoid Regulatory Scrutiny
It wants to avoid the regulatory scrutiny and disclosure requirements that come with being a public company. Going public would mean that Stripe would have to disclose more information about its operations, finances, and customer data, which could potentially compromise its privacy and security. As a private company, Stripe can keep this information confidential, which is essential for maintaining the trust of its customers.
2. Unfavorable Market Conditions
In 2021, Stripe was rumored to go public in late 2022 but market sentiment regarding loss-making companies was very negative, with rising inflation, interest rates, and economic uncertainty. This can lead to lower investor confidence and reduced funding opportunities for fintech startups.
3. Growing Competition
When Stripe was first started it only competed with a handful of companies with little to no market share but today things are very different, Fintech has quite grown and many new players have emerged. Some of the big competitors of Stripe are:
PayPal: The largest name in the online payment industry. It also owns Venmo.
Square: A financial service and digital payments company that provides point-of-sale systems, card readers, e-commerce tools, and more. It owns Cash App.
Adyen: It is a European payment platform that supports over 250 payment methods across 200 countries.
According to sources, Stripe has a market share of 22.47%, PayPal has 30.52%, Adyen has 11.26% and Square has 0.09% in payment management as of February 2023.
Future of Stripe
Stripe revenue has seen steady increases year on year. The company makes its money from taking a cut of transactions, 2.9% + $0.30 per successful charge for most cards. It also charges extra for international transactions and currency conversions. Its fees are lower than its main competitor PayPal.
According to the data shared with potential investors, Stripe’s payment volume increased 25% in 2022 after having grown 60% in 2021 — a reflection of the slowdown in the rate of eCommerce growth after the lifting of pandemic-era restrictions, the report said.
Overall, Stripe is well-positioned for continued growth in the future, thanks to its innovative products, strong brand, and expanding market opportunities. However, it will need to continue to stay ahead of the competition and navigate regulatory challenges in order to maintain its position as a leader in the online payments industry.