Block plunge in February leads fintech sell-off, Stripe valuation jumps

Stripe has once again shown why sometimes it’s better to be private.

During a February sell-off for fintech stocks, Block plunged 28%, its steepest decline since 2023, alongside drops of 20% or more for PayPal and Coinbase and a 8% slide in shares of SoFi. Meanwhile, Stripe on Thursday announced a tender offer for employee shares at a $91.5 billion valuation, making the payments company significantly more valuable than any of its public market peers.

“In general, they benefit from being private because there’s a handful of stocks that people want to buy and they trade at a premium to public valuations,” said Larry Albukerk, founder of EB Exchange, which helps facilitate trades in shares of pre-IPO companies.

He said Stripe is part of an exclusive group of private companies, along with SpaceX, Anthropic and Anduril, which are all seeing sky-high demand from investors.

“For every one of those, there’s 100 companies that don’t get that kind of premium,” Albukerk said.

The Collison brothers — Patrick and John — founded Stripe in 2010, a year after Jack Dorsey started Square, which is now part of Block. Crypto exchange Coinbase and online lender SoFi were both launched after Stripe.

While all of those companies went the traditional route of raising large amounts of capital from prominent venture capital firms, only Stripe has chosen to stay private. To relieve some pressure for liquidity, Stripe regularly allows early investors and employees to sell a portion of their stake. The tender offer this week marks a 40% increase from a year ago and gets the company close to its peak valuation of $95 billion that it reached in the frothy days of the Covid pandemic.

“We are not dogmatic on the public vs. private question,” John Collison, the company’s president, told CNBC’s Andrew Ross Sorkin this week, adding that Stripe has “no near-term IPO plans.”

Stripe’s peers have all had to report quarterly results of late, and it’s created a hefty dose of volatility and some concern. Last week, Block reported fourth-quarter earnings and revenue that missed analysts’ expectations, pushing the stock down 18%, its third-worst one-day drop on record.

PayPal shares tumbled even though the company blew past estimates and issued better-than-expected guidance. Coinbase topped expectations with revenue soaring 130%, powered by a post-election spike in crypto prices. Coinbase was a leading contributor to Republicans’ sweeping victory in November in its effort to help push forward a more crypto-friendly agenda in Washington, D.C.

But Coinbase fell earlier this week to its lowest price since just before the election, tumbling in tandem with bitcoin and other cryptocurrencies.