Stripe IPO: What You Need To Know and How To Buy

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Stripe is a private fintech company that boasts some of the world’s largest companies as customers, and processed more than $1 trillion in payments in 2023 alone.

This makes it one of the hottest private companies on the market — with investors clamoring for a piece of the Stripe pie when it officially goes public via an IPO or other avenue. But as of right now, you can’t simply buy Stripe stock through your broker.

If you want to invest in an upcoming Stripe IPO or to become a pre-IPO investor, we’ll break down the details of how to invest in Stripe and what the future may hold.

What Is Stripe?

Stripe is a technology company that enables businesses to accept online payments, founded in 2011 by brothers CEO Patrick Collison and President John Collison. Stripe has over 2,500 employees and is dual-headquartered in San Francisco and Dublin, with employees working in 14 offices around the globe, including London, Paris, Singapore and Tokyo.

Stripe provides a payments platform and API to companies from startups to global public companies. The company’s technology has a cloud-based architecture, resulting in reliability, scalability and security.

Overview of Stripe’s Business

Stripe also provides several tools in addition to its payments platform that allows businesses to “manage revenue, prevent fraud and expand internationally.” It also offers corporate credit cards and small business loans.

Some of the world’s largest companies use Stripe, including Amazon, Google, Salesforce, Shopify, Microsoft and many more. Stripe processes hundreds of billions of dollars per year in payments.

Stripe’s Growth and Achievements

Stripe is the most valuable private fintech company in the world. Part of the company’s growth has been by acquisition, including TaxJar in 2021 and Paystack in 2020.

A recent round of funding has boosted Stripe’s valuation to around $91 billion, per the Wall Street Journal.

Stripe is currently in talks to allow employees to exercise stock options and sell off private shares in the company at this recent $91 billion valuation. 

Is Stripe Planning an IPO?

Stripe may be planning an IPO, but there’s no official announcement or date set just yet.

Current Status of Stripe’s IPO Plans

Stripe hasn’t formally announced that it will go public or launch an IPO — but they have hired financial firms Goldman Sachs and JPMorgan to advise on a path to going public. This resulted in Stripe offering a “tender offer” to employees that want to sell off existing private shares or exercise stock options.

This move means that accredited investors and financial firms may be able to purchase shares directly from employees through the secondary market. Currently, Stripe is not giving too many hints about going public, so this is the only route to own shares of Stripe stocks right now.

Why Stripe May Go Public

Stripe has a few reasons for considering going public:

Capital raise. Selling off shares in an IPO or direct listing raises capital for expansion and product innovation. This can help Stripe grow to a much larger company.

Liquidity for private investors and employees. Early investors and employees that have helped Stripe grow into a global brand want to get compensated. Going public allows investors and employees to sell off shares at Stripe’s very high valuation — allowing them to cash out.

Founder exit. Stripe’s founders are rich, but going public may allow them to sell a substantial amount of shares and become very wealthy. This allows them to pursue other ventures, or simply enjoy the fruits of building a nearly $100 billion company.

How to Invest in Stripe Before Its IPO

You may not have to wait to invest in Stripe before it goes public. Here are a few ways to invest right now and some risks to consider:

Pre-IPO Investment Options

Accredited investors may be able to buy employee shares through secondary markets like EquityZen or Forge Global. But you must have a high net worth (at least $1 million outside your personal residence) or a high income (at least $250,000 per year) to qualify as an “accredited investor.”

Investing in Stripe via Private Equity Funds

As employees sell off private shares of Stripe stock, you may be able to invest in private equity funds in holding companies that scoop up these shares. Again, you may need to be an accredited investor to invest in these private equity funds that hold pre-IPO shares of Stripe stock.

Risks of Pre-IPO Investments

Choosing to invest in pre-IPO shares of Stripe stock comes with a few risks. You may not have many options to sell the stock should you need money, as you must use a secondary market and can’t trade through a traditional broker.

The value of Stripe may also drop significantly due to competition or bad company news. It’s important to only invest in private pre-IPO companies if you can afford the risk of losing your entire investment.

What Happens When Stripe Goes Public?

If Stripe goes public, it will certainly generate a lot of buzz in the stock market and the fintech space as a whole. Investors will probably be lining up to purchase shares as soon as they are available publicly.

IPO or Direct Listing

Stripe has several options to take the company public — including an Initial Public Offering (IPO) or a Direct Listing. Launching an IPO is when a company issues new shares of stock that are exclusively offered to the public. The valuation and share price are set beforehand, and new shares become available through brokers — allowing investors to purchase shares once they hit the market.

A Direct Listing is exactly what it sounds like — listing the company on major exchanges and allowing existing shareholders (investors and employees) to sell off shares. The price is not set beforehand, but is determined by the supply and demand of the market.

There is no clear indication which route Stripe will take — by it seems to favor holding private share value, which could point to a direct listing instead of creating new shares via an IPO.

Expected Market Impact

Investors are carefully watching for the possibility of a Stripe IPO. The company has done exceptionally well during the past decade since it was founded. Stripe is one of the largest and most valuable fintech companies and serves many of the world’s largest companies.

The stock market has recently been in love with fintech IPOs. For example, buy now, pay later business Affirm launched its IPO in January of 2021, and its shares nearly doubled.

Many investors wanting to invest in Stripe are hoping for a similar outcome. It could also raise the value of other fintech payments companies, depending on the valuation of Stripe’s public offering.

How to Buy Stripe Stock After the IPO

If Stripe decides to go public via an IPO or other method, here’s how to invest in Stripe stock:

Steps to Invest in Stripe Stock

To buy Stripe stock after it goes public, you’ll first need to open a brokerage account. It’s similar to opening a bank account — you’ll provide your personal and financial information and once open, you’ll deposit money.

Once the account is open, you’ll want to look up Stripe’s ticker symbol (when it’s announced) and choose how many shares to purchase.

Timing Your Investment

When investing in a new IPO, it’s usually a good idea to avoid jumping right in. Company insiders and inventors may be keen to sell off shares which can tank the value at first. When volatility settles, you can start investing, increasing your position over time as you feel comfortable. Again, investing in an IPO is risky, but taking a measured approach can help.

Should You Invest in Stripe?

A Stripe IPO has yet to be announced, but there are considerations to make before investing in any company. Investing in any company has risks, so you should consider your risk appetite and long-term investing goals. IPO stock prices can be volatile after the initial offering, so if you are investing for the long term, be patient.

Investing in Stripe could be a good opportunity if you’re interested in the fintech sector. The company’s strong market position and rapid growth make it appealing, but consider these points:

• Potential Upside: Stripe operates in a growing industry with high demand for payment processing. This can increase valuation after the company goes public — assuming it remains profitable.
• Risks: Market volatility and competition in fintech could impact returns. If a competitor disrupts the industry, this can cause Stripe stock prices to drop fast.

Scott Jeffries contributed to the reporting of this article.

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