Stripe Can’t Lose

For the last decade, Stripe could do no wrong. When the payments technology company—used by companies such as Amazon, Instacart, and Shopify—launched in 2010, it revolutionized the industry, making it much easier for small companies to accept payments. Entrepreneurs and software developers adored Stripe. Venture capitalists loved the company even more, pouring billions of dollars into the business, which made it, for a time, the most valuable private company in the U.S. at $95 billion. 

Within the broader tech industry, buyers have thirsted after Stripe shares on the secondary market, and working at Stripe began to signal the same level of intelligence and future potential that working at Google and eBay had in previous eras. Today, in the midst of a tech recession, many are hoping that Stripe can save the rest of the industry by being the first to go public, thereby opening up the opportunity for other companies to do the same.

But the picture is decidedly less rosy for Stripe than it was, say, two years ago. The company has had its wins—announcing partnerships with Amazon, launching new products, being named a Forrester Wave Leader—but for perhaps the first time in the company’s history, Stripe finds itself in a seemingly unfamiliar scenario: not everything is going its way. 

There was the unfortunate public kerfuffle with fellow fintech darling Plaid in May 2022, in which Stripe defended itself against allegations of unscrupulous conduct after it released Financial Connections, a product directly competitive to Plaid’s core offering—after Stripe had offered Plaid to its clients instead of its own product.

Then came reports that mutual funds like Fidelity Investments and T. Rowe Price were marking down their holdings in Stripe by as much as 64%. Stripe has marked down its internal valuation three times since June 2022. 

In November 2022, amid a broader tech slowdown, the company laid off 14% of its staff, stating that the company "grew operating costs too quickly." Recent reporting from The Information has revealed that Stripe plans to provide liquidity to employees—some of whom have restricted stock units, or RSUs, that are set to expire 10 years after they were initially issued—by going public through a direct listing or by continuing to raise funds from private investors. The Information’s reporting also uncovered concerns about the company’s financials: slowing revenue growth and a lack of profitability. 

Stripe isn’t doomed—but its success is not inevitable. Nor will it be the only winner in the payments industry. 

Stripe is an innovative company that is facing competition as it moves upmarket and fends off new entrants as the market expands. As Stripe approaches an eventual public offering, it must become more disciplined in its spending, learning to balance investments in long-term growth with near-term profitability. Let’s take a look at where Stripe started from and what it’s up against in 2023 and beyond.