The year 2020 was a whirlwind for public corporations. According to FactSet, the number of initial public offerings (IPOs) in the United States doubled to 494, raising a total of $174 billion, up 150 percent from the previous year, thanks to strong demand for technology and electric car stocks, as well as a frenzy of blank-check SPAC businesses.
There was one high-profile holdout, however: Stripe. Many predict that the IPO will take place in 2021, and that it will be larger than any of the other widely anticipated IPOs, such as Coinbase, Instacart, and Roblox.
Stripe is now the most valuable private firm in Silicon Valley, with a $600 million fundraising round valuing the company at $95 billion.
What is an initial public offering (IPO) and how does it work?
An initial public offering (IPO) is the process of selling shares in a private company to the general public in a new stock issuance. What’s the point of going public? The main advantage of becoming public is that it provides easier access to finance.
A company must have a track record of growth and other positive results in order to go public, as well as engage an investment bank to underwrite the IPO. The underwriters also did their due investigation and double-checked the financial data and business concept. The corporation sells the stock to institutional investors once the documentation is completed. The corporation sets an initial price and date for the stock to begin trading on a stock exchange once the initial block of shares has been sold.
Financial Indicators Prior to Stripe’s Initial Public Offering
A private appraisal put the company’s value at over $36 billion in October. Stripe was reportedly looking to raise capital by selling holdings valued at between $70 and $100 billion, according to a Bloomberg article from late November. Given how hot the IPO market has been and how much shares in promising digital businesses have been bid up in early auction trading, the stock might hit the market with a valuation of much more than $100 billion.
The most recent financing round, which closed in September 2019, brought the business $600 million. Stripe’s valuation nearly doubled in a year, reaching $36 billion in April 2010. The company raised $2 billion in total, based on the results of all investment rounds.
Meanwhile, according to Forbes USA, the Collinson brothers have a fortune of roughly $4.30 billion dollars, making them one of the top ten youngest billionaires in the world.
According to some experts, the company’s value after the IPO might range from $45 billion to $100 billion. Despite its extremely lofty ambitions, the organisation still has opportunity for expansion. As a result, in 2020, Stripe paid $200 million for Paystack, a payment service provider based in Nigeria.
Before the Stripe IPO, Here’s How to Buy Stripe Stocks (Offering Price)
Previously, IPOs as highly profitable investments were exclusively available to privileged customers of big brokerage firms, making it difficult for regular investors to participate. You couldn’t buy shares at the company’s established price; instead, you had to wait until the shares began trading on the open market at whatever stock price supply and demand would allow.
Regular investors can now purchase pre-IPO shares thanks to technological advancements and online marketplaces. You must utilise an IPO investing app such as Freedom Finance (NASDAQ: FRHC), TD Ameritrade, or Fidelity to participate in the Stripe IPO. Customers can use their existing brokerage account to access IPOs and secondary offers. When Stripe goes public, you can also acquire shares through a commission-free trading service like eToro.
Instructions in detail How to get in on the Stripe IPO before it goes public:
We’ve included instructions on how to use Freedom Finance to invest in the upcoming Stripe IPO (Freedom24 platform). Because the Stripe IPO is already listed on this marketplace, it was chosen as an example.
- Pros: Freedom Finance offers access to the majority of high-profile IPOs, there are no eligibility conditions, no past transactions are required, and there is a minimal minimum investment amount for participating in an IPO.
- Cons: The platform’s user interface is a little old. Citizens and residents of the United States are not eligible for Freedom Finance services.
- Apply for a Freedom Finance account by preparing your identification paper and a document confirming your current address (utility bill). The verification process is fairly quick; your account will be created in less than two minutes.
- Deposit your account – in order to participate in an IPO, you must have accessible funds in your account equal to the amount of the IPO application. It’s a good idea to put money into your account ahead of time. Until the last day, the precise IPO date is sometimes unknown. It’s possible that you’ll only have a short notice to participate, and account deposits take time to process. Also, when you have two hours to participate in an IPO, Freedom may send you a last-minute offer.
- Submit an application to participate in the IPO — once the application period has opened, go to Stripe and click Participate in the IPO > enter the amount you wish to invest > Send your application. A request can be retracted before the book closes. The chosen amount will be blocked on the account at the moment of the book closing, one day before the commencement of exchange trading.
- Wait for allocation — The quantity of stocks purchased during an initial public offering is determined by supply and demand. Partially executing collective applications is a right reserved by the higher underwriter. As a result, if demand is great, you may receive less than what you applied for. You will, of course, only pay for the shares you have acquired. The remaining amounts will be credited back to your account.
- The purchased shares will show on the account with the start of public trading on the stock exchange, and a lock-up period — a 93-day period of prohibition on sale — will commence. You won’t be able to sell stocks, but you will be able to keep track of their current value and growth indicators in your personal member area and through a trading terminal.
- Closing your deal – At the end of the 93-day lock-up period, you will have the option of keeping your stocks in your portfolio, selling them and withdrawing the proceeds, or transferring them to another depository/broker in your name. This can be done by clicking the ‘Sell’ button next to the security’s name in your account. A commission of 0.5 percent of the selling transaction amount is levied in this situation.
Is it worthwhile to invest in initial public offerings (IPOs)?
Not all of the time. According to data from previous IPOs, the average return at the end of the lock-up period is 52 percent.
When will Stripe go public?
Stripe’s initial public offering (IPO) date has yet to be determined.
If you want to be notified when the actual Stripe IPO date is revealed, please subscribe for updates here.
What is the price range for Stripe’s first public offering?
If you wish to be notified when the Stripe IPO offering price is known, please subscribe for alerts here.
Directions How do I invest in Stripe after the initial public offering (IPO) date (opening price)?
On the first trading day after the IPO, you can buy Stripe equities through Freedom24. Alternatively, if you’re based in the United States, you can utilise a commission-free trading programme like eToro.
What currencies will Stripe’s IPO and post-IPO shares be traded in?
The IPO and stock trading currency for Stripe will be USD.
If you have funds in another currency, the most cost-effective approach to convert it is to use the mid-market rate (the one you’ll discover on Google), which you can accomplish through a fintech firm like Transferwise. Banks may charge you more without your knowledge by adding hidden markups to their exchange rates. If there is a cost, you will be charged twice. Fees are never hidden in the exchange rate with TransferWise.
When it comes to currency exchange, the best and cheapest option to do so is through Binance, the world’s largest currency exchange. If you don’t already have an account, you can sign up for one here for free and get 5% cashback on every trade you make.