Welcome to a special Thanksgiving edition of The Exchange. Today we will be short. But don't be silent, because there is a lot to talk about.
Above, The Exchange hinted at the Slack-Salesforce deal here, so please contact us if you missed it while eating cake for breakfast yesterday. And sadly, I have no idea why Palantir is seeing its value skyrocket. We would normally discuss it, wondering what its earnings might mean for the lower tiers of private SaaS companies. But since its movement on the public market appears to be an artificial increase in value, we will wait.
Here's what I want to talk about this nice Saturday: Bloomberg reports that Stripe is in the market for more money, at a price that could estimate the company at "more than $ 70 billion or significantly higher, up to $ 100 billion".
Damn hot. Band it would become the first or second most valuable startup in the world at those prices, depending on how you count. Startup is a weird word to use for a company that is worth so much, but because Stripe still clings to private markets like a liferaft of sorts, it continues to raise external funds and is presumably more focused on growth than profitability, retains the distinctive qualities of a technological startup, so, of course, we can call it such.
Which is odd, because Stripe is a huge concern that could be worth twelve figures, provided it gets that $ 100 billion price tag. It's hard to find a good reason it's still private, other than the fact that it can get away with it.
Anyhoo, are those reported, possible crazy prices? Could be. But there is a logic in them. Remember that square and PayPal Earnings have indicated strong payment volume over the past few quarters, which bodes well for Stripe's recent growth. Also note that about 14 months ago, Stripe was already processing "hundreds of billions of dollars worth of transactions per year".
You can do fun math at this juncture. Let's assume Stripe's processing volume was $ 200 billion last September and $ 400 billion today, considering the number as an annualized metric. Stripe charges 2.9% plus $ 0.30 for one transaction, so let's call it 3% for simplicity and to be cautious. That math reaches a rate of $ 12 billion.
Now, the company's actual numbers may be closer to $ 100 billion, $ 150 billion, and $ 4.5 billion, right? And Stripe won't have the same gross margins as Slack .
But you can begin to understand why Stripe's new pricing isn't 100% wild. You can make multiples work if you believe in the company's growth story. And to help the discussion are his public compositions. Square's shares have more than tripled this year. PayPal's value has more than doubled. Adyen's shares nearly doubled. This is the kind of public market pull that can really help a late stage startup looking to raise new capital and secure an aggressive price tag.
To conclude, Stripe's possible re-evaluation might make sense. The fact that it is still a private company does not.
Market Notes
Various and various
And speaking of edtech, Equity's Natasha Mascarenhas and our intrepid producer Chris Gates put together a special ep on the education technology market. You can listen to it here. All right.
Hugs and we both go for some cardio