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Stripe is the Latest Fintech to Falter, Taking a 28% Internal Valuation Cut


Stripe is the latest high-profile fintech company to experience a significant valuation cut as the market downturn begins to hit the sector especially hard. Last valued at $95 billion, the payments processor has seen the internal value of its shares slashed by 28%, sources told the Wall Street Journal.

The Journal reports that the valuation cut comes from a 409A price change, determined by an independent party, and that it impacts the value of of Stripe’s common shares, though implicitly, that means that the value of the preferred shares owned by Stripe’s venture backers will also go down, because preferred shares are converted to common shares before a company is acquired or goes public. (Sometimes, for optical reasons and because it would be time-consuming and expensive, firms that do 409As don’t come up with new prices for the preferred.)

Companies are supposed to do a 409A every 12 months or when a material event might lower its valuation; the material event in this case is obviously the collapse of the stock market.