Stripe, a richly-valued payments startup, has cut its internal valuation yet again, according to sources familiar with the manner. It is now valued, internally, at $63 billion.
The cut, first reported by The Information, puts Stripe’s internal per-share price at $24.71, down 40% since peaking. The 11% cut comes after a prior internal valuation cut that occurred six months ago, which valued the company at $74 billion.
The valuation change was not triggered by a new funding round, but instead a new 409A price change. 409A valuations are set by third-parties, which means that they are not tied to what a venture backer or other investor thinks. It’s an IRS-regulated process that measures the value of common stock against public market comps to help set a fair market value.
Companies are supposed to do a 409A at least every 12 months or when a material event might lower its valuation. In Stripe’s case, alongside other late stage companies, the 409A valuation reviews are now getting conducted on what looks like a quarterly basis. Material events in the background range from the evergreen, and ever-tense macroeconomic climate; and let’s not forget that Stripe’s public market comps are certainly showing signs of trouble, with Shopify, Block and Paypal all down from their 52-week highs.
Internal valuation cuts offer a different signal than an investor-led markdown. In fact, many founders and industry experts see a company receiving a 409A valuation that’s lower than its private, investor-led valuation, as a good thing. Per analysts, that’s because a low 409A valuation allows companies to grant their employees stock options at a lower price. Companies can also use the new, lower 409A valuation as a recruiting tool, luring prospective employees with