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Articles / How to Invest in Stripe IPO: Buy Stripe Stock

How to Invest in Stripe IPO: Buy Stripe Stock

Conor Scott, CFA| Updated January 5th, 2023
How to Invest in Stripe IPO: Buy Stripe Stock 1

An official date for the Stripe IPO remains to be announced, yet it did take the first step toward a public listing in 2021 by hiring the law firm Cleary Gottlieb Steen & Hamilton LLP to help with initial preparations. 

However, in July 2022, Stripe received a 28% cut in its internal valuation through a new 409A valuation, slashing the internal price to 29 USD from 40. This move lowered its shares’ implied market capitalization (valuation) by approximately 22% to 74 billion USD from a previous high of 95 billion

However, a 409A valuation reflects an independent estimate of a company’s fair market value, often done to value new employee stock options. It does not suggest a change in the opinions or valuations of Stripe by its private investors. 

Likely, its IPO will list on the New York Stock Exchange (NYSE) or Nasdaq exchange. The latter exchange in particular, caters to technology-focused investors who may want to invest in Stripe’s IPO. 

In this article, we will help clarify all the information about the Stripe IPO: its date, how to buy Stripe’s IPO, and the stock itself. 

What is Stripe?

Founded in 2010 and headquartered in San Francisco, Stripe has already raised 1 billion USD since the start of the COVID-19 pandemic with top Silicon Valley investors, such as Sequoia Capital and Andreessen Horowitz. The startup is a software as a service company and application programmer enabling companies to accept or send payments. 

The company earned its fame on Wall Street by cashing over 12 billion USD in revenue for 2021.

It serves well-known names such as Glossier, Twilio, and ride-hailing staple Lyft. In Europe, its customers include Jaguar Land Rover, Waitrose, Deliveroo, Klarna, N26, and more. In 2022, Stripe put customers and investors on notice that its expanding its payment processing service to include what it calls “Financial Connections,” or the ability for Stripe clients to connect directly to their customers’ bank accounts for expediting certain transactions. This shifts Stripe from a plain vanilla processing company to an information handler and premier service provider.

When Is Stripe’s IPO Date?

Due to market conditions and Netskope’s strong balance sheet, a reasonable estimation is 2024. This estimation could change under the status of S&P 500’s current bear market. IPOs are unlikely to occur during a prolonged bear market. 

Likely due to the recent cuts in fintech company valuations by virtue of 2022’s bear market, the company has not yet provided an IPO date. However, a reasonable market estimation is by 2024 as it has already initiated the IPO process. This could change pursuant to the status of S&P 500’s current bear market. IPOs are unlikely to occur during a prolonged bear market. 

Prior to July 2022’s 409A independent valuation, Stripe’s valuation stood at an impressive 95 billion USD by March 2021, making it a once-hotly anticipated IPO for 2022. A funding round in April 2021 gave it a valuation of 36 billion USD. In other words, a 164% jump in less than a year. 

Yet S&P 500’s bear market of 2022 brought with it bad news for growth-oriented tech stocks. In July of the same year, the Swedish buy-now-pay-later company had its investor-given valuation cut by 85% to 6.7 billion USD. Earlier in March, Fidelity cut its Stripe valuation by 9%, suggesting an overall cooling in the fintech market. 

All this points to a post-2022 IPO date for Stripe. The record-breaking interest rate hikes and double-digit inflation numbers continue to dampen “risk-on” tech investing. We expect better news when the bear market returns to its proverbial hibernation.

How to Order Stripe Stock Before the IPO

Yes, you can order Stripe shares before the IPO. This is known as a “pre-placement.” In theory, several brokers may allow you to do just that. However, the only one which has already announced it will make an effort to give access to Stripe IPO is Freedom24.

Among other brokers, TradeStation has not announced if and when it will become available but seems open to it since they offer access to US IPOs. Please take a look at both:

1# Freedom24

How to Invest in Stripe IPO: Buy Stripe Stock 2
Visit Freedom24
Investing involves risk of loss.

Freedom24 at a glance

Pre-IPO Placement
Minimum amount for IPO participation$2,000
Other ProductsStocks, ETFs, Bonds, Futures and Options
RegulatorsCySEC, BaFin, SEC
Countries SupportedEuropean Union (no US, UK or Canadian Investors)

Founded in 2008, Freedom Finance, the official company name of Freedom24, has already offered to its 400,000+ worldwide clients participation in 280+ IPOs, including 40,000+ trade stocks, 1,500+ ETFs, 1,000+ US Stock Options, and 147,000+ bonds on the largest exchanges in Europe, Asia, and the US.

With Freedom24, the process to participate before the IPOs feels incredibly straightforward:

  1. Open an account with a minimum of 2,000 USD (the minimum for an IPO request);
  2. Submit a request for the available IPO stocks before their respective IPO dates;
  3. Freedom24 automatically credits your account with those shares purchased by them on your behalf (“oversubscribed” IPOs may make it difficult for your orders to be filled completely);
  4. Sell your stocks after the 93-day lock-up period or purchase a forward sale contract through Freedom24 to lock your gains before the 93 days period.
Stripe IPO

Freedom24 | Stripe IPO

To invest in Stripe’ IPO, you will technically become a Freedom Finance client. Nothing to worry about here, that’s simply the name of the broker running the platform Freedom24. 

Want to know more about Freedom24? Check our Freedom24 review.

2# TradeStation

How to Invest in Stripe IPO: Buy Stripe Stock 3
Visit TradeStation

TradeStation at a glance

Pre-IPO Placement
Minimum amount for IPO participation$500
Other ProductsStocks, ETFs, Bonds, Futures, Options, Mutual Funds and Crypto
RegulatorsSEC, FINRA
Supported CountriesWorldwide - including the US and UK (Canadians not allowed)

Founded in 1982, TradeStation is a US broker committed to offering you the best trading experience within their rewarded platforms and brokerage services. You can trade stocks, ETFs, options, futures, and crypto with competitive pricing models.

With TradeStation, you must follow these steps:

  1. Open an account with a minimum of 500 USD;
  2. Download the ClickIPO app (Available both on iOS and Android);
  3. Register on ClickIPO’s trading platform and select TradeStation as your broker;
  4. Link your TradeStation account in the “My Account” section of the ClickIPO app

For US residents, you have zero commission trades (including the IPO stocks). For international investors, please consult their pricing here.

tradestation IPO

TradeStation | IPOs

There is no guarantee that TradeStation will offer Stripe’ IPO, still, the optionality is there. We encourage you to follow the company and wait for their official announcement. After that, ask TradeStation if they will offer it.

Is Investing in IPOs Profitable?

While this often boils down to knowledge and investing experience, you can earn a profit by investing in IPOsBetween the two brokers mentioned above, Freedom24 is the only one that provides statistical figures for its past IPO offering. So, we will present it here as a result.

Freedom24 has so far provided 265 companies, in stocks of which approved clients have been able to invest at IPO prices. On average, they earned a 53% return by the end of the stock’s lock-up period.

How to Invest in Stripe IPO: Buy Stripe Stock 4

Freedom24 | Past IPO Outcomes

We strongly suggest entering your email (no strings attached!) to receive the latest statistics from Freedom24.

Is Stripe’s IPO a Good Investment?

Generally, investing in an IPO is riskier than investing in a stock already known to the public market, either through an American exchange like the NYSE or a European exchange like the LSE. 

However, there remain a few essential items to have on your analytical checklist, no matter the stock or sector. 

  1. Gross revenue (“top line”) 
  2. The revenue drivers, such as active user or member growth
  3. Profit margins, often EBITDA as a percentage of top line; EBITDA means “earnings before interest, tax, depreciation, and amortization”
  4. Its private valuation growth, earned whenever a private capital raising with major investors, hedge funds, or banks occurs
  5. Cumulative funding and current (pre-IPO) investors 
  6. The management team
  7. Its competitors

If an “IPO Filing” has already occurred, a great place to start is taking the time to read through any stock’s original prospectus available on SEC. This helps cut through the noise and hype typically surrounding an IPO. 

Finding such information before an IPO filing remains difficult, yet reputable trade journals such as Forbes, WSJ, Crunchbase, or TechCrunch provide meaningful estimates. 

With respect to Stripe’s IPO, the below estimates are currently available, noting it is in USD:

  1. Revenue (2021): over 12 billion USD, a 60% increase year-on-year
  2. Customer count: over 3.2 million with 32 acceptable payment methods available
  3. Private valuation: 74 billion, a -22% year-over-year decrease
  4. Total cumulative funding: 2.2 billion
  5. Investors include: Allianz X, AXA, Baillie Gifford, Elon Musk, Fidelity, Sequoia Capital, and Ireland’s National Treasury Management Agency, among others 
  6. Management: Patrick and John Collison (brothers) jointly founded Stripe and are both Irish tech billionaires
  7. Stripe has several competitors, the most notable of which being Square, PayPal, Adyen, and Plaid

And there you have a quick snapshot of Stripe. It’s important to remember that you want to see consistent growth over several years (at least three) without any breaks in momentum. 

In this scenario where a company reveals limited information, particularly concerning their income statement and balance sheet, it’s also vital to track their customer growth and investor base. If multiple independent trade journals or conferences also rate their products highly, the company could be a winner. 

However, a clear hesitation to reveal financials suggests an inordinate amount of spending, which almost always draws intense scrutiny. This data becomes available in an IPO filing. 

The Bottom Line

We’re excited about Stripe’s IPO. It has garnered an incredible valuation at 74 billion USD, doubling over 2020’s 36 billion, and leads in the payment processing space. 

It’s clear the company tapped into an expanding market. While the “smart money” follows Stripe, investors should never turn complacent. Any growth story needs consistency and solid financials. 

Stripe might provide the +50% return you’re looking for, but we suggest you conduct your own research or sit down with a professional advisor. Why not take a look at all of Freedom24’s upcoming IPOs and make a list? Or simply wait for any announcement from TradeStation and then decide which broker to use? It’s your call.

FAQs about Stripe IPO

What is an IPO, and how does it work?

An “IPO” is an initial public offering. As it sounds, it marks a stock’s first trading day on a relevant and public exchange. Most IPOs are crowded, or “oversubscribed,” making it almost impossible to receive the actual initial price unless you opt for a pre-order through a platform like Freedom24 and TradeStation.

Is Stripe a public company?

No, Stripe is currently a private company.

How Does Stripe make money?

Please see our more detailed review of Stripe’s IPO above. Stripe earns revenue by generally charging 2.9% of a transaction plus 25 US cents.

How can I find Stripe’s IPO prospectus?

After an IPO filing occurs, the prospectus is available to the public through the US SEC for stocks trading on an American exchange. 

When will the Stripe IPO happen?

While this remains the decision of Stripe, we expect to receive further clarity on its IPO date by 2024. The current S&P 500 and Nasdaq bear markets are also discouraging new IPOs. 

Can you invest in Stripe’s IPO?

Yes, Freedom24 and TradeStation are great platforms for doing just that.

What other IPOs are coming soon?

Some upcoming IPOs include the Reddit IPO, Discord IPO, Netskope IPODatabricks IPO, Porsche IPO, and Instacart IPO.

Conor Scott, CFA

Conor is a CFA charterholder who has been active in the wealth management industry since 2012, continuously researching the latest developments affecting portfolio management and cryptocurrency.