Stripe investor T Rowe Price has become the latest to slash its valuation for the Irish-owned technology giant’s shares – writing the stock down by 64pc versus the price it was valued at the end of 2021.
hares had soared in value in late 2021 making the latest drop especially stark but the new price is around 40pc less than in a March 2021 Irish taxpayer-supported fund-raising that valued Stripe at $95bn (€95bn) and made the Collison brothers’ business at the time the most valuable private company in Silicon Valley.
The latest drop suggests Irish taxpayers’ stake in the global payments may be worth in the region of $24m versus the $50m invested by the National Treasury Management Agency (NTMA) in that March 2021 deal – although paper valuations of private companies like Stripe are not liquid, making valuation a question of judgment unless a loss or gain is crystallized through an actual sale.
US money manager T Rowe Price revealed the new price in a regulatory filing that valued the shares at $23.04 a as of June 30. The March 2021 fundraising was at around $42 a share.
Investors in that funding round included funds linked to Allianz, Axa, Baillie Gifford, Fidelity, Sequoia and Irish State money manager the National Treasury Management Agency (NTMA).
Earlier this year, Fidelity cut its valuation of Stripe shares to $32.05 each. In July the company itself cut its so-called internal valuation to $29 a share, using a third party valuation for staff share allocations in line with US tax and employment rules.
The NTMA, which holds its Stripe stake through the Ireland Strategic Investment Fund (Isif), had not changed its valuation when it reported an update on its investment portfolio last December, meaning it did not ‘book’ a paper profit when the share price spiked in late 2021 and is yet to revise them down.
A revised NTMA valuation is due to be included with an overall portfolio update in December this year.
The write downs in the valuation of Stripe are not unusual – the trend has been seen among its peers, most clearly in the stock market-quoted prices of publicly traded companies like Adyen, a Dutch digital payments processor, but also in cases like Swedish ‘ buy-now-pay-later’ credit platform Klarna which saw its valuation plunge $39bn to $6.7bn when it went through a new funding round at a reduced valuation.
On a day-to-day basis a drop in a company’s valuation does not have an impact on its ability to trade, but it does imply a higher cost of capital, which can be significant for cash-hungry businesses looking to scale up rapidly, and can significantly reduce its capacity to make acquisitions funded by its shares.