Stripe IPO: Everything you need to know about Stripe
Ben Lobel October 14, 2021 1:02 PM
Stripe has grown into a major player in the online payments space, setting itself apart from rivals PayPal and Square with a laser focus on customer experience and raising more than $1 billion since 2019. Here’s the lowdown on the company in advance of the potentially huge Stripe IPO.
Stripe IPO: What do we know about the Stripe IPO?
The Stripe IPO has not yet been announced, but interest is growing for its inevitable flotation. The valuation of the company could be around $100 billion or more post listing, according to various reports. The IPO is expected to occur in 2022, with the company reportedly in talks with investment banks about the transaction.
Want to trade more IPOs? Visit our IPO trading page.
Also, stay ahead of the curve with information on more huge IPOs set to happen this year:
How to trade Stripe shares
When Stripe lists, you’ll be able to trade Stripe shares in the same way you would any other publicly-traded company on the stock market.
Meanwhile, you can trade a wide range of stocks with us via these easy steps:
Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
How much is Stripe worth?
Stripe is worth some $95 billion based on its latest fundraising round of $600 million in March 2021. The figure is a huge jump from its mark in April 2020, when the company was valued at $36 billion following its Series G extension round led by Sequoia Capital.
What does Stripe do?
Stripe is a San Francisco-based financial services company with a focus on online payments solutions, as well as APIs for e-commerce players.
The company was started in 2009 by Irish-born programming brothers John and Patrick Collison. The pair sought to improve on the existing payment processing offering for businesses, seeking a solution to the outdated legacy systems of banks and the developer integration shortcomings of PayPal.
After selling a software-as-a-service (SAAS) business for $5 million in 2008, the pair raised initial seed funding of more than $2 million from Y Combinator in 2010 and 2011. Further investment came from the likes of PayPal founders Elon Musk and Peter Thiel, which allowed Stripe to emerge from its beta and launch officially in September 2011.
In 2012, the company raised $18 million in its Series A led by Sequoia Capital, which allowed it to flesh out the team and progress its plans to expand outside the US, with a Series B of $20 million following just months later. In 2014, $80 million was secured through a Series C which brought about further international expansion beyond the 12 countries in which Stripe operated.
By the next year, the company was ready for nine-figure raises, securing $100 million in 2015, $150 million in 2016, and $245 million in 2018. By this point, the company had built a global reputation for disrupting how businesses collect funds online, having diversified its range of services to include Stripe Issuing, Stripe Terminal, and its Radar fraud detection offering.
The company would raise a further $950 million in 2019 and 2020 alone, with a $600 million round in 2020 coming during coronavirus lockdowns, during which time the company grew further amid a boost in online shopping.
By the latest $600 million raise in 2021, Stripe had built revenues reported to be $1.6 billion for 2020, with more than 4,000 staff on the payroll.
Who are Stripe’s competitors?
Stripe’s main competitors are the likes of PayPal and Square. PayPal’s IPO in 2002 valued the company at $1.5 billion, a mark that swelled to north of $360 billion by 2021. While PayPal is more established as a brand, Stripe is generally recognised to have a more innovative range of features based on its developer tools.
Founded in 2009, Square is known for its utility in mobile payments processing, while Stripe is more aligned with internet payments. Square IPO’d well ahead of Stripe, raising $243 million for a valuation of some $2.9 billion in 2015. Square is reportedly worth around $120 billion in 2021.
How does Stripe make money?
Stripe makes money mainly through transaction fees, with the company processing hundreds of billions of dollars each year for its clients. Fees are split between payments, covering online transactions, billing, for subscriptions and invoicing, connect, for clients that need to pay third-party sellers, and terminal, for in-person point of sale payments.
Additional revenue streams for the company include business loans through its Stripe Capital service, the Radar product to help businesses detect and identify fraudulent charges, and custom reports focusing on finance and data analysis.
What is Stripe's business strategy?
Stripe’s business strategy from the beginning was, broadly, centred around making payment processing easier for its professional clients by delivering a product that was more attuned to customer needs than PayPal. Simple, borderless and programmable payments was the order of the day.
The goal to eclipse PayPal for functionality was approached in a somewhat unconventional way when the Collison brothers not only met with PayPal founders Elon Musk and Peter Thiel, but convinced them to invest in their business.
Such association helped inspire venture capital firms to provide their backing, leading to a series of funding rounds totalling $2.2 billion as of August 2021. In turn, the investment allowed the company to make the right hires to further its international expansion, culminating in a presence in 44 countries and growing.
The company’s focus on customer experience extended not only to its clients, but the clients of its clients. To this point, the interface of a site using Stripe’s payment system remains uncluttered by third-party branded workflow, preserving a clean user experience.
In addition to diversifying its own revenue streams, the company has made a series of strategic acquisitions such as authentication solution Bouncer, cloud-based tax service offering TaxJar and, in a bid to expand into Africa, the Nigerian payments provider Paystack in 2020.
Is Stripe profitable?
Stripe is reportedly profitable based on its latest EBITDA figures of $120 million. However, the company does not disclose detailed financials that provide comparison to prior years’ accounts.
Who owns Stripe?
The ownership of Stripe is split between a range of individuals, such as the Collison brothers who founded it, and investment institutions such as Sequoia Capital and General Catalyst that contributed to financing rounds. The exact equity split is not currently in the public domain.
Board of directors of Stripe
John Collison – President
Patrick Collison – Chief Executive Officer
Claire Hughes Johnson – Chief Operating Officer
Dhivya Suryadevara – Chief Financial Officer
Billy Alvarado – Chief Business Officer
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.