This fintech was just valued at $65 billion. Could it be one of the biggest IPOs of 2024?

A few years ago, strong financial markets and investors' high risk appetite paved the way for a record year for initial public offerings (IPOs). Then the Federal Reserve began aggressively raising interest rates to curb inflation, geopolitical uncertainty increased, and declining markets kept many private companies on the sidelines.

After a long lull, conditions have become more favorable for companies going public. The S&P 500 has hit all-time highs multiple times this year, confirming the bull market in stocks that began in October 2022 Renaissance IPO ETFan index of the largest IPO stocks in recent years, is up 63% since the start of last year.

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An interesting fintech company that I have on the radar for an IPO is Stripe. The company first explored an IPO in 2021, but put those plans on hold and instead raised money privately.

Now that conditions are improving, could Stripe become one of the largest IPOs of 2024? Here's what we know about fintech and what could happen next.

Stripe has contributed to the explosive growth of e-commerce

Chances are, you've used Stripe without knowing it. Founded in 2009, Stripe makes it easy and simple for businesses to accept payments online. The company offers an online payment processing platform where e-commerce businesses can easily accept various payment methods.

Before Stripe came along, accepting online payments was a hurdle for many businesses. Complex setups, high fees, and integrating payment gateways into websites were a headache for small businesses just starting out. Stripe simplified the process and made e-commerce more accessible for merchants and customers.

Stripe Terminal also offers card readers and software tools that enable merchants to accept in-person payments. In return for this service, Stripe receives transaction fees of approximately 2.9%, plus $0.30 for online transactions. In-person transactions are charged 2.7% plus $0.05.

The story goes on

The fintech has further developed its Banking-as-a-Service (BaaS) offering, providing companies with the tools to create bank-like offerings based on existing infrastructure. An example is Shopify Balance gives merchants greater control over their finances, allowing them to manage funds, pay bills, and track expenses – all in one place.

The fintech presents impressive figures

Although Stripe is not yet a household name, it is a big player in the payment processing industry. According to data from Statista, Stripe has an 18% share of the payment processing technology market, which includes payment gateways and buy now, pay later products. With a 45% share of this market PayPal is the only company with a larger market share.

In 2023, the company processed more than $1 trillion in total payment volume, a 25% increase from the previous year. To illustrate: PayPal reached a payment volume of over $1 trillion in 2021. Additionally, Stripe experienced positive cash flow during the year.

Chart by author.

The latest fundraising reached a valuation of $65 billion

Stripe has gone through multiple rounds of fundraising. The best-known investors include Elon Musk, Peter Thiel, Max Levchin and venture capital firms such as Sequoia Capital. According to data from Capital one Shopping Research, Stripe raised $8.7 billion in 20 fundraising rounds. The bulk of this fundraising came last year, when the company raised $6.5 billion at a valuation of $50 billion.

According to TechCrunch, Stripe and some of its investors agreed earlier this year to buy $1 billion worth of shares from current and former employees. The tender offer values ​​Stripe at $65 billion, a 30% increase from last year.

Will Stripe finally go public in 2024?

Investors have been waiting a long time for a Stripe IPO, but they may have to be patient. Stripe first explored an IPO in 2021, but decided to raise money privately instead.

The company's cash flow is positive, and if it can continue this positive momentum for a few more years, it could allow for a higher valuation upon eventual IPO. Due to its recent round of funding as part of its employee tender offer, Stripe's long-awaited IPO likely won't happen until 2025 at the earliest.

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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal and Shopify. The Motley Fool recommends the following options: short March 2024 calls worth $67.50 on PayPal. The Motley Fool has a disclosure policy.

This fintech was just valued at $65 billion. Could it be one of the biggest IPOs of 2024? was originally published by The Motley Fool