4 ms·

Wait, people are selling off Stripe? I know they called off the IPO and a lot of customers seem to be upset lately (given all the HN posts), and they had layoff

by dmazin 4y ago

Wait, people are selling off Stripe? I know they called off the IPO and a lot of customers seem to be upset lately (given all the HN posts), and they had layoffs, but the fundamentals seem much stronger for Stripe than the other companies on this list. Maybe I should buy some of those secondary shares…

simfree 4y ago
At the end of the day they are an API connector and Independent Sales Organization on one of the major platforms (First Data, Tsys, etc) who processes the authorizations for Visa, Mastercard and such. The space has many competitors like Braintree, PayPal, Authorize.net and many more, each with their own twist on what makes them unique. Stripe's only moat is switching costs, but with their current pricing model it can be justified for customers that have scaled to migrate away. If Stripe had better customer support than average, clairvoyance on what limits your account has, or vaguely competitive rates (especially on Debit & ACH) they might have more of a moat. ISOs are a dime a dozen and there are many groups like Gravity Payments that are willing to commit fraud against Visa and Mastercard to get clients rates that are 0.10% lower, nevermind the double to quadruple interchange rate that Stripe charges...
- toomuchtodo 4y ago
  To add on to this, FedNow Instant Payments are going GA in a few months, which are instant payments from any US deposit account by way of the Federal Reserve for a nickel per transaction (up to $25k limit to start, approaching $100k after the system shakes out). Margin compression in the entire credit card supply chain should be a expected, as they’re about to lose their primary benefit: immediate auth and quick settlement.
- dmazin 4y ago
  Thank you for your insightful answer. As I understand, Stripe grew so huge first via its great API (I distinctly remember comparing it against its competitors back in the early 2010s, and even though Stripe was more expensive, the developer ease was worth it) and then by being the go-to default. As you say, now other products have long caught up w.r.t. API niceness, and Stripe is simply riding momentum. Of course, Stripe has also expanded into tons of other categories. I wonder how much of their revenue comes from those other new products. If they are successfully growing those products, I still think Stripe has good fundamentals... but I don't actually know how well those products are doing and how much revenue (and revenue growth) comes from them.
LatteLazy 4y ago
I would generally prefer not to own shares in my employer, even to short them in theory: I am already very over exposed to them via my salary etc so even if I thought they were fine I would likely sell just to diversify...
- muzz 4y ago
  This is actually what financial advisors would tell you, if you worked for a publicly traded company. I.e., treat the shares granted as cash income by selling them, and separate your income from your investment decisions. For startups shares though, the illiquidity and the possibility for 10x,100x, et returns-- albeit two sides of the same coin-- are part of the risk/reason to be work for a startup
1vuio0pswjnm7 4y ago
VISA and Mastercard have better balance sheets than Stripe. We have less financial disclosure from Stripe because they remain a private company. Buying shares of Stripe sounds reasonable if you are disillusioned by "tech" ideals and do not care about throwing money away. Go for it. I would bet on VISA. This "tech" company idea of "disruption" is likely to be dismantled in 2023. Not to mention other "tech" hype mind games.

by dmazin 4y ago

simfree 4y ago

At the end of the day they are an API connector and Independent Sales Organization on one of the major platforms (First Data, Tsys, etc) who processes the authorizations for Visa, Mastercard and such. The space has many competitors like Braintree, PayPal, Authorize.net and many more, each with their own twist on what makes them unique. Stripe's only moat is switching costs, but with their current pricing model it can be justified for customers that have scaled to migrate away. If Stripe had better customer support than average, clairvoyance on what limits your account has, or vaguely competitive rates (especially on Debit & ACH) they might have more of a moat. ISOs are a dime a dozen and there are many groups like Gravity Payments that are willing to commit fraud against Visa and Mastercard to get clients rates that are 0.10% lower, nevermind the double to quadruple interchange rate that Stripe charges...

toomuchtodo 4y ago
To add on to this, FedNow Instant Payments are going GA in a few months, which are instant payments from any US deposit account by way of the Federal Reserve for a nickel per transaction (up to $25k limit to start, approaching $100k after the system shakes out). Margin compression in the entire credit card supply chain should be a expected, as they’re about to lose their primary benefit: immediate auth and quick settlement.
dmazin 4y ago
Thank you for your insightful answer. As I understand, Stripe grew so huge first via its great API (I distinctly remember comparing it against its competitors back in the early 2010s, and even though Stripe was more expensive, the developer ease was worth it) and then by being the go-to default. As you say, now other products have long caught up w.r.t. API niceness, and Stripe is simply riding momentum. Of course, Stripe has also expanded into tons of other categories. I wonder how much of their revenue comes from those other new products. If they are successfully growing those products, I still think Stripe has good fundamentals... but I don't actually know how well those products are doing and how much revenue (and revenue growth) comes from them.

LatteLazy 4y ago

I would generally prefer not to own shares in my employer, even to short them in theory: I am already very over exposed to them via my salary etc so even if I thought they were fine I would likely sell just to diversify...

muzz 4y ago
This is actually what financial advisors would tell you, if you worked for a publicly traded company. I.e., treat the shares granted as cash income by selling them, and separate your income from your investment decisions. For startups shares though, the illiquidity and the possibility for 10x,100x, et returns-- albeit two sides of the same coin-- are part of the risk/reason to be work for a startup

1vuio0pswjnm7 4y ago

VISA and Mastercard have better balance sheets than Stripe. We have less financial disclosure from Stripe because they remain a private company. Buying shares of Stripe sounds reasonable if you are disillusioned by "tech" ideals and do not care about throwing money away. Go for it. I would bet on VISA. This "tech" company idea of "disruption" is likely to be dismantled in 2023. Not to mention other "tech" hype mind games.