- Principal’s Large Cap Growth Fund slashed its valuation of Stripe by 20% in December.
- It’s the latest sign that there’s more pain to come for startups that have ambitions of going public.
- Mutual funds have been revaluing their shares of late-stage startups throughout 2022.
Mutual funds are continuing to prune the valuations of startups they invest in, and Stripe is once again feeling the heat.
Principal’s large-cap growth fund, which is sub-advised by T. Rowe Price and Brown Advisory, just slashed the valuation of the fintech startup by nearly 20% at the end of 2020. It marked down the value of its shares of Stripe from $2,629,463 at the end of November to $2,112,472 at the end of December.
Given Principal’s fund holds 114,126 shares, that means Stripe’s per-share valuation dropped from $23 to $18.50 in a month.
The move is a sign that startup valuations are continuing to take a beating after a brutal 2022 that featured a VC-funding drought, an essentially nonexistent IPO market, and a spate of tech layoffs affecting more than 150,000 workers.
Some startups keep their valuations closely guarded secrets. But mutual funds — many of which, like Principal, publish monthly holdings reports — provide clues to how young companies are faring. Throughout 2022, these reports have shown that Stripe and other startups have been feeling the heat all year.
Fidelity’s Contrafund, another mutual fund that has a stake in the payment processor, valued Stripe’s stock at $40.12 at the end of November 2021. By the end of January 2022, the value of those same shares dropped to $36.25 — and Fidelity further cut down its value to $27.15 a share in May.
Stripe itself slashed its internal valuation multiple times in 2022, according to the Information — downgrading 33% from a sky-high $95 billion when it raised a $600 million Series H in 2021, to $63 billion.
The fintech in November 2022 laid of 14% of its workforce.
Representatives for Stripe did not immediately respond to a request for comment.
Stripe, however, is far from the only startup that’s seen its valuation slashed in the past year: mutual-fund valuations of grocery-delivery startup Instacart and social-media site Reddit — both of which had at one point been planning to IPO — have also suffered.