Stripe receives a $115 billion valuation ahead of its public debut
Stripe, the payment processing startup, is about to go public at a $115 billion valuation.
Stripe record public debut
Fintech companies have done well during the pandemic. In the past few years, PayPal has grown from a relatively small peer-to-peer money transfer company into one of the biggest firms in the world. It is valued at more than $300 billion.
And this year, Affirm, a buy now, pay later company, went public and is now valued at more than $25 billion.
The next big fintech firm set to IPO is Stripe. For starters, Stripe is a technology company that enables online companies to receive payments. It serves more than 1 million companies globally, including well-known brands like Uber, Slack, Spotify, Asos, and OpenTable, among others. The firm makes money by taking a small commission for every transfer it processes.
While Stripe has not published its earnings, analysts estimates that it processed more than $250 billion in 2019. As the coronavirus pandemic spread, this amount increased by more than 50%.
Stripe is one of the most funded private companies in the United States. It has raised more than $1.6 billion from venture firms like General Catalyst, Sequoia, and Andreessen Horowitz.
Unlike many other companies, Stripe is considering going public through a direct listing. This is where a company’s investors sell their holdings to external investors. A direct listing is often seen as a better alternative to the lengthy and often expensive process of an Initial Public Offering (IPO). Other companies that have used the process are Asana and Spotify.
More fintech public companies
There is an increasing demand for fintech companies in the public markets. Investors value their disruptive business model and the large market opportunity. In the past few years, many fintech companies have received premium valuations than other companies.
For example, last year, Ant Financial was valued at more than $300 billion before its botched IPO in Hong Kong. The company has more than 1 billion customers in China. This year, companies like TransferWise and WorldRemit will also receive a multibillion-dollar valuation in their London IPOs. Further, analysts estimate that Coinbase will be valued at more than $77 billion in its IPO this year.
Stripe has also grown rapidly because of acquisitions. Last year, the company acquired PayStack, a Nigeria-based company for more than $200 million. It has also invested in firms like Safepay, Accord, and Balance.