The problems continue to mount in the finance and fintech sector. Payment processing giant Stripe is the latest firm to slash its valuation by a steep margin. Privately-funded companies continue to struggle in the current landscape, and stockholders remain eager to liquidate their holdings.
Stripe Takes A Big Haircut
It is not entirely surprising to see fintech companies adjust their valuation over time. However, one would expect those valuations to rise rather than go down. In the case of Stripe, things are not looking too great. Despite hitting a valuation of $95 billion in March 2021, the company is now dropping like a brick.
More specifically, that drop comes through technology shares and stocks being dumped on the market. It is not an issue native to Stripe, but the company has been caught up in the process. Roughly $21 billion of its valuation has now been wiped out, representing a 28% decline. Moreover, according to an email sent to employees, Stripe will move its implied share price to $29 instead of $40.
Interestingly, Stripe co-founder John Collison does not appear to be concerned. About a month ago, he stated how the company had plenty of money in the bank and would pursue further growth opportunities. The slashed valuation indicates something else entirely, although Stripe will still be valued at $74 billion.
Even so, the big question is whether Stripe can raise additional funding at the new valuation. The previous funding round brought in $600 million, yet that seems an unrealistic target. Overall interest and risk appetite for finance and tech companies continue to decline due to macroeconomic circumstances. Therefore, adjusting expectations will be essential.