Stripe Sets One-Year Timetable to Decide on Going Public

Stripe hired

Goldman Sachs Group Inc.

and

JPMorgan

Chase & Co. to advise it on both options, the people said.

A payments processor to internet companies such as

Shopify Inc.

and Instacart Inc., investors view Stripe as an index of sorts for all of Silicon Valley. Its last fundraising nearly two years ago valued the company at $95 billion.

Stripe’s stock-market listing could help revive an initial public offering market that went dormant in 2022.

A bellwether of 2010s-era startups that grew into giant technology companies, Stripe long preferred to stay private and disclose few details to outsiders about its performance. That created pent-up demand over the years for investors who clamored to own a piece of Stripe but didn’t have a chance.

Rising interest rates, soaring inflation and fears of a recession contributed to a broad selloff in tech stocks, especially those of newly public companies, and prompted many startups to shelve their plans to go public. Traditional IPOs in the U.S. raised just $8.6 billion in 2022, less than any other year in at least two decades, according to Dealogic.

Stripe probably wouldn’t conduct a traditional IPO, though. Because it doesn’t need to raise additional capital, the company would likely pursue a direct listing, the people said.

In a direct listing, a company places existing shares on a public exchange and lets the market determine the price. Unlike a traditional IPO, the company doesn’t choose the price of the shares or who gets to buy them, and it typically doesn’t raise any money. Those selling stock in a direct listing are usually employees or other early investors.

Stripe is also part of an older generation of Silicon Valley startups that are facing pressure to give employees the chance to sell their shares. Many private companies that decided not to mount public listings last year were forced to find new ways to keep employees, who now must hold on to their shares, motivated.

After pulling its public listing in October, grocery delivery app Instacart offered its first-ever companywide cash bonuses and said it would find additional ways for employees to get value, The Wall Street Journal reported.

A pandemic-fueled boom in e-commerce turbocharged Stripe’s business, with 2020 annual revenue increasing nearly 70% to about $7.4 billion, the Journal previously reported. A March 2021 fundraising round valued Stripe at $95 billion, making it one of the world’s most valuable startups.

Last year was more challenging. Consumers returned to in-store shopping and changed their spending patterns in the face of high inflation.

Stripe laid off 14% of its workforce in November, and the Collison brothers admitted that the company’s leadership overestimated the internet economy’s near-term prospects and allowed undisciplined expense growth. Shares in Stripe competitors

Adyen

NV and

PayPal Holdings Inc.

are down about 50% and 75%, respectively, from their 2021 peaks.

Last July, Stripe cut an internal share price often used to price stock options given to employees to $29 from $40, lowering the implied value of the company to $74 billion, the Journal reported. It recently cut the value of those shares again to $25, people familiar with the matter said, giving the company an implied valuation of $63 billion.

Stripe is hoping 2023 will be more auspicious. Earlier this month, the company announced it was expanding work it does for

Amazon.com Inc.

to process a significant portion of Amazon’s total payments volume across businesses such as Prime, Audible and Amazon Pay in the U.S. and other markets.

—Berber Jin contributed to this article.

Write to Peter Rudegeair at [email protected] and Corrie Driebusch at [email protected]