Growth At All Cost Doesn't Work
Stripe CEO Patrick Collison stated in a letter to staff that 2022 has been more difficult than previous years. The company blamed inflation, energy shocks, higher interest rates and lower investment budgets for the company's slowdown. Yet, it also acknowledged leadership mistakes in which they overestimated online sales growth for 2022 while underestimating the risks of a broad slowdown.
- According to Collison's writing, the layoffs will leave Stripe with a staff of close to 7,000, which entails the loss of roughly 1,000 jobs
- Some teams will be disproportionately more affected by the layoffs than others
Hidden Layoffs And Valuation Cut
However, the current announcement follows Forbes' report a few weeks ago that Stripe was already taking steps to reduce its personnel, with senior management pushing team leaders to assign lower grades on performance assessments over the summer.
- This wouldn't be surprising as Adyen, an Amsterdam-based competitor in the payments markets, has historically delivered comparable or even better sales and EBITDA figures
- All while employing only a third of Stripe's headcount
The company also reportedly cut its valuation over the last months by 28%, bringing its valuation from around $ 100B back to around $ 74B. This is still lower than the valuation crush public peers such as Block, PayPal and many other digital payments companies have experienced.
"Fintech firms have been hit hard by rising inflation and fears of an impending recession, which could threaten to further reduce online consumer spending. Many public investors have sold off shares in payments firms like Adyen, whose stock is down over 40% since the beginning of the year."
"The harsher environment is already hurting some high-profile fintech startups. Earlier this year, Swedish payments firm Klarna Bank AB, which offers a buy-now, pay-later service, raised new cash at a $6.7 billion valuation, down from the $45.6 billion valuation it raised at in June 2021." By Berber Jin and Peter Rudegeair for the Wall Street Journal
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Photo by Nout Gons.