Stripe if you haven't heard of them before are a massive payment processor for big companies around the World. With the boom of online over recent years they have grown into a massive player valued at $95 billion in 2021. Recently the company was seeking another investment round of $2 billion at a market valuation of $65 million.
The problem is they grew too quickly and basically overstaffed themselves which has now got them into some financial difficulty. Most companies fall in the opposite category of not being able to keep up with growth with the backside of the company trying to stay in contact. There is also the tax problem of giving the staff shares which comes at a price and this is what the reported $2 billion is now required.
Late last year Stripe layed off 14% of it's staff being 1120 so this suggests they had 8000 employees in total. How a company can go from valuations just over a year ago from $95 billion down to $74 billion and now the latest at $63 billion is rather worrying. Yes the world has changed somewhat and business is a lot tougher.
If one looks at their top 10 clients you can see where they boomed and have or should have made a fortune but apparently haven't.
Stripe Top 10 Client List
What is a key note to take on board is the company stated they were profitable in 2021 with revenue of over $12 billion, but have not publicly revealed their revenues since 2021. That would mean they earned over $348 million excluding all the $0.30c service fees. The plan is either to go forward with an IPO next year or an exit possibly through a sale. I would lean to the latter as this payment processing is going to become a hell of a lot tougher within the next 12 months.
Interesting to note is COTI is coming into this payment processing field later this year and already has 3 large companies signed up. There are non disclosure agreements so we have no clue who they are, but we know they are global companies who want to take control of their own payment processing. I suspect at least one or possibly 2 are on this top 10 list and knowing a trend is about to shift against Stripe and others do the owners want to bail before it is too late? Stripe would know who these companies are as this is not something that can be kept under wraps and possibly these companies have already informed them that they will be terminating their services when the current contract expires.
I find this rather interesting as the company grew from nothing in 2010 and they charge 2.9% of every sale plus a $0.30c transaction fee. In many ways they are leeches acting as the go between for clients and banks by offering a payment facility. If they cannot make this work with the amount of business they have then this has surely got to go down as poor management and planning. Scaling your business too quickly and jumping too far ahead is crippling them.
We have seen so many so called successful businesses scaling back especially with regard to crypto exchanges. Everyone knows there is a boom time and a slow time so they should be working accordingly and not be dumping thousands of staff members which they obviously never needed in the first place. Last year 22 000 crypto jobs were lost and another 2000 reported this month already. This just comes across as so amateurish with poor management and poor planning.
One would like to think that 3 years of boom time in crypto would cover the 12-18 months of the downside as where is all the money going?