Block’s 28% plunge in February leads fintech sell-off, while Stripe shows benefit of staying private
Patrick Collison, chief executive officer and co-founder of Stripe Inc., left, smiles as John Collison, president and co-founder of Stripe Inc., speaks during a Bloomberg Studio 1.0 television interview in San Francisco, California, U.S., on Friday, March 23, 2018.
Bloomberg | Bloomberg | Getty Images
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.
Brian Armstrong, CEO of Coinbase, speaking on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland on Jan. 21st, 2025.
Gerry Miller | CNBC
It’s been a rough stretch for stocks overall, particularly in the tech sector. The Nasdaq fell about 4% in February, and the S&P 500 declined 1.4%.
Investors have been rattled in recent days by President Donald Trump’s promise of tariffs and economic reports flashing warning signs. Notably, initial filings for unemployment benefits hit their highest level of the year last week in another potential sign of weakness in the labor market.
Fintechs can be more sensitive to economic conditions than the broader tech sector because they’re more directly effected by interest rates, employment data and consumer confidence.
Private market premium
By remaining private, Stripe is able to skirt the daily, weekly and monthly stock swings while also disclosing far fewer numbers to the public regarding its financial health.
The biggest revelation Stripe offered in its annual letter on Thursday is that it generated $1.4 trillion in total payment volume in 2024, up 38% from the year prior. The company said it was profitable in 2024, and expects to remain so this year, without providing specifics, and the only revenue figure it offered was that its finance and tax reporting unit topped a $500 million run rate.
Kelly Rodriques, CEO of private securities marketplace Forge, said Stripe’s valuation jump shows there’s enthusiasm for private companies, even some that aren’t focused specifically on artificial intelligence. Forge’s Private Market Index, which tracks demand for shares in private companies, has surged more than 33% in the past three months, and that’s before Stripe’s latest announcement.
“Stripe’s valuation increase could be further evidence of the broad rally we’re observing in the private market that is now rippling beyond the AI sector, which has driven most of the momentum over the last several months,” Rodriques said in an email.
Albukerk noted that another aspect to the spike in Stripe’s price is the scarcity of volume available for investors and the difficulty in getting access to it other than through the tender offers.
It’s one of those private companies “where there’s a lot of demand and very little supply,” he said.
However, just being private doesn’t eliminate Stripe’s other challenges.
In his interview on “Squawk Box,” John Collison highlighted the growing complexity of financial compliance and said banks are becoming more conservative in their partnerships with fintechs.
“We have started to see the financial system become more involved in financial policy enforcement,” Collison said. “And then you tend to get these occasional flare-ups from time to time.”
Both Wells Fargo and Goldman Sachs have distanced themselves from the company, according to The Information, prompting Stripe to turn to Deutsche Bank and other institutions for key services. Collison didn’t provide details to CNBC, but acknowledged that Stripe has had to navigate shifting relationships.
“Banks are tightly regulated, and they in general want to have a sound book of business,” he said. “They don’t want to get into arguments with their regulator.” According to The Information, Stripe has tripled its risk and compliance headcount to 700 employees over the past two years.
The area with the most regulatory scrutiny has been crypto, which was a notoriously challenging area for companies to operate during the Biden administration. The Federal Deposit Insurance Corporation recently released internal records obtained via FOIA requests, revealing that regulators had sent “pause letters” urging banks to reconsider relationships with crypto firms.
Trump has made a point of loosening restrictions on crypto, and one of his first actions as president was to sign an executive order to promote the advancement of cryptocurrencies in the U.S. and work toward potentially developing a national digital asset stockpile
Stripe made its biggest jump into crypto with the closing this month of its $1.1 billion purchase of Bridge, a provider of stablecoin infrastructure. Stripe’s goal with the deal is to enable more payments via crypto, as Bridge focuses on making it easier for businesses to accept stablecoin payments without having to directly deal in digital tokens.
In its annual letter, Stripe said that stablecoin transactions more than doubled between the fourth quarter of 2023 and the same period last year.
“The fundamentals for stablecoin adoption have only recently fallen into place, enabling the explosive growth we now see,” the company wrote.
— CNBC’s Ari Levy contributed to this report.
WATCH: CNBC’s full interview with Stripe co-founder and president John Collison
The Applied Materials logo on Dec. 17, 2024.
Nurphoto | Nurphoto | Getty Images
Applied Materials shares sank more than 10% in extended trading Thursday as the semiconductor equipment company provided outlook for the current quarter that came in light.
Here’s how Applied Materials did in its third-quarter earnings results versus LSEG consensus estimates:
- EPS: $2.48, adjusted, versus $2.36 estimated.
- Revenue: $7.3 billion vs $7.22 billion estimated.
Applied Materials said it expects $2.11 per share in adjusted earnings in the current quarter, lower than LSEG estimates of $2.39 per share. The company said to expect $6.7 billion in revenue, versus $7.34 billion estimated.
CEO Gary Dickerson said that the current macroeconomic and policy environment is “creating increased uncertainty and lower visibility.” He said the company’s China business is particularly effected by the uncertainty.
The Trump administration’s tariffs could double the price of imported chips unless companies buying them commit to building in the U.S. Applied Materials makes tools for chip foundries to physically make chips, much of which currently happens in Asia.
Applied Materials said that it has a large backlog of pending export license applications with the U.S. government, but that it’s assuming none of them will be issued in the next quarter.
“We are expecting a decline in revenue in the fourth quarter driven by both digestion of capacity in China and non-linear demand from leading-edge customers given market concentration and fab timing,” the company’s finance chief said in a statement. He added that it expected lower China business to continue for several more quarters.
Applied Materials reported $1.78 billion in net income, or $2.22 per diluted share in the quarter, versus $1.71 billion or $2.05 in the year-ago period.
The company’s most important division, semiconductor systems, reported $5.43 billion in sales, topping estimates, and representing a 10% rise from last year.
Applied Materials was praised by President Donald Trump earlier this month after it was included in an Apple program to make more chips in the U.S.
Apple said it would partner with the chipmaker to produce more manufacturing equipment in Austin, Texas.
WATCH: Apple and Trump detail $100 billion U.S. spending expansion: Here’s what to know
Lip-Bu Tan, chief executive officer of Intel Corp., departs following a meeting at the White House in Washington, DC, US, on Monday, Aug. 11, 2025.
Alex Wroblewski | Bloomberg | Getty Images
Intel shares rose 7% on Thursday after Bloomberg reported that the Trump administration is in talks with the chipmaker to have the U.S. government take a stake in the struggling company.
Intel is the only U.S. company with the capability to manufacture the fastest chips on U.S. shores, although rivals including Taiwan Semiconductor Manufacturing Company and Samsung also have U.S. factories. President Donald Trump has called for more chips and high technology to be manufactured in the U.S.
The government’s stake would help fund factories that Intel is currently building in Ohio, according to the report.
Earlier this week, Intel CEO Lip-Bu Tan visited Trump in the White House, a meeting that took place after the president had called for Tan’s resignation based on allegations he has ties to China.
Intel said at the time that Tan is “deeply committed to advancing U.S. national and economic security interests.” An Intel representative declined to comment about reports that the government is considering taking a stake in the company.
“We look forward to continuing our work with the Trump Administration to advance these shared priorities, but we are not going to comment on rumors or speculation,” the spokesperson said.
Tan took over Intel earlier this year after the chipmaker failed to gain significant share in artificial intelligence chips, while it was spending heavily to build its foundry business, which manufactures chips for other companies.
Intel’s foundry business has yet to secure a major customer, which would be a critical step in moving towards expansion and giving other potential customers the confidence to turn to Intel for manufacturing.
In July, Tan said that Intel was canceling plans for manufacturing sites in Germany and Poland and would slow down development in Ohio, adding that spending at the chipmaker would be closely scrutinized.
Under Trump, the U.S. government has increasingly moved to put itself at the center of deals in major industries. Last week, it said it would take 15% of certain Nvidia and Advanced Micro Devices chip sales to China. The Pentagon bought a $400 million equity stake in rare-earth miner MP Materials. It also took a “golden share” in U.S. Steel as part of a deal to allow Nippon Steel to buy the U.S. industrial giant.
Intel shares are now up 19% this year after losing 60% of their value in 2024, the worst year on record for the chipmaker.
WATCH: Trump decision to allow chip sales to China is ‘reverse tariff’
Alexander Karp, chief executive officer and co-founder of Palantir Technologies Inc.
Scott Eelis | Bloomberg | Getty Images
Palantir‘s astronomical rise since its public debut on the New York Stock Exchange in a 2020 direct listing has been nothing short of a whirlwind.
Over nearly five years, the Denver-based company, whose cofounders include renowned venture capitalist Peter Thiel and current CEO Alex Karp, has surged more than 1,700%. At the same time, its valuation has broken new highs, dwarfing some of the world’s technology behemoths with far greater revenues.
The artificial intelligence-powered software company continued its ascent last week after posting its first quarter with more than $1 billion in revenue, reaching new highs and soaring past a $430 billion market valuation.
Shares haven’t been below $100 since April 2025. The stock last traded below $10 in May 2023, before beginning a steady climb higher.
Retail investors are a key part of the stock’s strength.
Last month, retail poured $1.2 billion into Palantir stock, according to data from Goldman Sachs.
Here’s a closer look at Palantir’s growth over the last five years and how the company compares to megacap peers.
Government money
Government contracts have been one of Palantir’s biggest growth areas since its inception.
Last quarter, the company’s U.S. government revenue grew 53% to $426 million. Government accounted for 55% of the company’s total revenue but commercial is showing promise. Those revenues in the U.S. grew 93% last quarter, Palantir said.
Still, one of the company’s oldest customers is the U.S. Army.
Earlier this month, the company inked a contract worth up to $10 billion for data and software to streamline efficiencies and meet growing military needs. In May, the Department of Defense boosted its agreement with Palantir for AI-powered battlefield capabilities by $795 million.
“We still believe America is the leader of the free world, that the West is superior,” Karp said on an earnings call earlier this month. “We have to fight for these values; we should give American corporations, and, most importantly, our government, an unfair advantage.”
Beyond the U.S.
The U.S. has been a key driver of Palantir’s growth, especially as the company scoops up more contracts with the U.S. military.
Palantir said the U.S. currently accounts for about three-quarters of total revenues. Commercial international revenues declined 3% last quarter and analysts have raised concerns about that segment’s growth trajectory.
Over the last five years, U.S. revenues have nearly quintupled from $156 million to about $733 million. Revenues outside the U.S. have doubled from about $133 million to $271 million.
Paying a premium
Palantir’s market capitalization has rapidly ascended over the last year as investors bet on its AI tools, while its stock has soared nearly 500%.
The meteoric rise placed Palantir among the top 10 U.S. tech firms and top 20 most valuable U.S. companies. But Palantir makes a fraction of the revenue of the companies in those lists.
Last quarter, Palantir reported more than $1 billion in quarterly revenue for the first time, and its forward price-to-earnings ratio has surged past 280 times.
By comparison, Apple and Microsoft posted revenue of $94 billion and $76 billion during the period, respectively, and carry a PE ratio of nearly 30 times.
Forward PE is a valuation metric that compares a company’s future earnings to its current share price. The higher the PE, the higher the growth expectations or the more overvalued the asset. A lower price-to-earnings ratio suggests slower growth or an undervalued asset.
Most of the Magnificent Seven stocks, except for Nvidia and Tesla, have a forward PE that hovers around the 20s and 30s. Nvidia trades at more than 40 times forward earnings, while Tesla’s sits at about 198 times.
At these levels, investors are paying a jacked-up premium to own shares of one of the hottest AI stocks on Wall Street as its valuation has skyrocketed to astronomical heights.
“This is a once-in-a-generation, truly anomalous quarter, and we’re very proud,” Karp said on an earnings call following Palantir’s second-quarter results. “We’re sorry that our haters are disappointed, but there are many more quarters to be disappointed.”
CNBC’s Gabriel Cortes contributed to this story.
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