Technology

Stripe tells employees it will decide on an IPO within the next year

Published

2 years ago

January 26, 2023

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Stripe co-founder and CEO, Patrick Collison

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Stripe, the fintech company once valued at $95 billion by private market investors, will make a decision on its plans to go public within the next year, CNBC has confirmed.

Co-founders and brothers John and Patrick Collison told employees on Thursday that they will set a goal of taking the company public or letting staffers sell shares through a secondary offering, The Information first reported.

The tech IPO market has been frozen since late 2021 after two record-breaking years during the Covid pandemic. Late-stage private companies were forced to delay their plans and, in many cases, raise cash at reduced valuations in 2022, as higher interest rates, recessionary concerns and a plummeting stock market altered the tech landscape.

In July, Stripe cut its internal valuation by 28%, from $95 billion to $74 billion. Earlier this month, The Information reported that Stripe again lowered its valuation to $63 billion.

Stripe, which provides payments software for e-commerce businesses, topped CNBC’s Disruptor 50 list in 2020.

Founded in 2010, Stripe’s business took off as the U.S. economy and labor market began to recover from the financial crisis. Revenue was turbocharged during Covid from the boom in e-commerce. But in November, the company laid off roughly 14% of its staff as the Nasdaq headed for its worst year since 2008.

“We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” the founders wrote in a memo announcing the layoffs. They said they now have to build “differently for leaner times.”

Stripe is considering a direct listing or private market transaction and has hired Goldman Sachs and JPMorgan to advise on the deal, CNBC has learned.

CNBC is now accepting nominations for the 2023 Disruptor 50 list – our 11th annual look at the most innovative venture-backed companies. Learn more about eligibility and how to submit an application by Friday, Feb. 17.

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IPO market could rebound in the second half of this year, says Rohit Kulkarni

Technology

Just Eat Takeaway to delist from London Stock Exchange in blow to UK market

Published

3 hours ago

November 27, 2024

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Just Eat Takeaway to delist from London Stock Exchange in blow to UK market

Just Eat Takeaway said it was delisting its shares from the London Stock Exchange due to the “low liquidity and trading volumes” of its shares on the exchange.

Mike Kemp | In Pictures | Getty Images

Just Eat Takeaway will delist from the London Stock Exchange next month, in a blow to the U.K.’s ambitions to attract more high-growth tech firms to its stock market.

After completing a review of optimal listing venues, the Anglo-Dutch food delivery firm said Wednesday that it intends to delist from London’s stock exchange, making Amsterdam Just Eat Takeaway.com’s sole trading venue.

Explaining its decision, Just Eat Takeaway said it was delisting its shares from the LSE in a bid to “reduce the administrative burden, complexity and costs associated with the disclosure and regulatory requirements of maintaining the LSE listing, and in the context of low liquidity and trading volumes.”

Just Eat Takeaway shares slipped 1.5% following the delisting announcement.

It has requested that the LSE and the Financial Conduct Authority, the U.K.’s markets watchdog, cancel its listing, so that it can remain primarily listed on the Amsterdam exchange.

The delisting will become effective from 8 a.m London time on Dec. 27, while Dec. 24 will mark the last date of trading of Just Eat Takeaway’s shares on the LSE.

Earlier this month, Just Eat Takeaway.com said it would sell its GrubHub arm to New York-based online takeout startup Wonder for $650 million — a huge discount compared to the $7.3 billion the firm paid for the U.S. food delivery app.

Technology

Reddit targets international users for ad growth, teases bolstered search feature

Published

5 hours ago

November 27, 2024

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Reddit targets international users for ad growth, teases bolstered search feature

Reddit logo on website.

Jakub Porzycki | Nurphoto | Getty Images

Reddit is ramping up efforts to attract more users outside of the U.S., putting countries like India and Brazil in focus as it looks to unlock new advertising opportunities, a top company executive told CNBC.

In a wide-ranging interview, Jen Wong, chief operating officer of Reddit, said other platforms have 80% to 90% of users outside of the U.S. while about half of her company’s current users are based internationally.

“So that points to a lot of our future user growth opportunity definitely outside of the U.S. and local language,” Wong told CNBC. “The opportunity, the way I think about it, is every language is an opportunity for another Reddit.”

Reddit has historically been an English-language platform, but the company is looking to expand its international reach with the help of artificial intelligence translations. This year, Reddit launched a feature that automatically translates its site into different languages.

Wong said that around 20 to 30 languages could be available by the end of the year.

India opportunity

Among the company’s fastest-growing markets in terms of users is the U.K., the Philippines, India and Brazil.

“India’s growing really rapidly,” Wong said. “We see a big opportunity in India.”

The Reddit COO said that India has a large English-speaking internet population, and there are lots of engaged users around topics like cricket and the Bollywood movie industry.

Wong also said Reddit has been meeting with “mods” — or moderators, who oversee content on communities on the site.

Advertising opportunity

Growth in markets like India can propel Reddit to boost ad revenue, its main source of income.

International markets account for just over 17% of Reddit’s revenue currently, according to the company’s third-quarter results, despite around 50% of its users being located outside the U.S.

Wong said that Reddit first attempts cross-border advertising for international markets, such as when a European brand is looking to advertise in the U.S. Then, when Reddit hits about 10% of a country’s internet population in a country, there is an opportunity to build teams focused on local advertising — like an Indian brand advertising to Indian users.

This has not yet happened in many markets, but Reddit is keeping an eye on many of its fastest growing countries, Wong said.

New search tools

Reddit users will know that it’s not always the easiest site to find what you’re looking for — a drawback that the company is now looking to change with new search tools.

During Reddit’s third-quarter earnings call last month, CEO Steve Huffman called search on the platform a “focused investment” in 2025.

Wong expanded that the company is thinking of its search feature as a way of helping users to navigate around the site to find similar topics or posts that they may have otherwise missed.

“You land on a post and but it’s almost like a dead end. But there are a lot of posts, often like that post, or there are other posts like that post in other communities. And so giving you a total view of what that looks like is a really interesting opportunity,” Wong said.

“Guiding you through Reddit as you follow that line of thinking, is how we think of the opportunity.”

Wong declined to say more except, “We’re testing a lot of things.”

Technology

OpenAI gets new $1.5 billion investment from SoftBank, allowing employees to sell shares in a tender offer

Published

7 hours ago

November 27, 2024

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OpenAI gets new .5 billion investment from SoftBank, allowing employees to sell shares in a tender offer

Sam Altman, chief executive officer of OpenAI, during an event in Seoul, South Korea, on Friday, June 9, 2023.

SeongJoon Cho | Bloomberg | Getty Images

OpenAI is allowing employees to sell roughly $1.5 billion worth of shares in a new tender offer to SoftBank, CNBC has learned.

The new financing will allow the Japanese tech conglomerate to get an even larger slice of the AI startup, and it will allow current and former OpenAI employees to cash out their shares, two people familiar with the matter told CNBC.

Employees will have until Dec. 24 to decide if they want to participate in the new tender offer, which has not previously been reported, one of the people said. The deal was spurred by SoftBank billionaire founder and CEO Masayoshi Son, who was persistent in asking for a larger stake in the startup after putting $500 million into OpenAI’s last funding round, one of the people said.

The tender offer is not related to OpenAI’s potential plans to restructure the firm to a for-profit business, one of the people said.

OpenAI and SoftBank declined to comment.

The news underscores Son’s interest in the AI space and in backing the most valuable private players. SoftBank was an early investor in Arm, and Son said at a recent conference that he’s saving “tens of billions of dollars” to make the “next big move” in artificial intelligence. He had previously invested in Apple, Qualcomm and Alibaba.

SoftBank’s Vision Fund 2 recently invested in AI startups Glean, Perplexity and Poolside. SoftBank has about 470 portfolio companies and $160 billion in assets across its two vision funds.

The OpenAI investment matches SoftBank’s eagerness to deploy cash, with a capital-intensive business model, a person close to Son told CNBC.

Even without SoftBank’s deep pockets, OpenAI has had no trouble raising billions in cash. Its valuation has climbed to $157 billion in the two years since launching ChatGPT. OpenAI has raised roughly $13 billion from Microsoft, and it closed its latest $6.6 billion round in October, led by Thrive Capital and including participation from chipmaker Nvidia, SoftBank and others.

The company also received a $4 billion revolving line of credit, bringing its total liquidity to more than $10 billion. OpenAI expects about $5 billion in losses on $3.7 billion in revenue this year, CNBC confirmed in September with a person familiar with the situation.

OpenAI employees can cash out

The tender offer will be open to current and former employees who had been granted restricted stock units at least two years ago and have held the shares for at least that long, one of the people said. The unit price of $210 will align with the company’s most recent funding round.

Tender offers have become crucial for tech employees amid a dormant IPO market and skyrocketing company valuations. Private companies rely on such deals to keep employees happy and reduce the pressure to list on public markets. Since OpenAI has no initial public offering immediately on the horizon and a price tag that makes the company prohibitively expensive for would-be acquirers, secondary stock sales are the only way in the near future for shareholders to pocket a portion of their paper wealth.

Databricks is another private company raising money to allow employees to cash out and avoid public markets pressure, CNBC reported this week.

OpenAI took a more restrictive approach to tender offers in the past, with rules allowing the company to determine who gets to participate in stock sales, CNBC reported in June. Current and former OpenAI employees previously told CNBC that there was growing concern about access to liquidity after reports that the company had the power to claw back vested equity.

But the company reversed its policies toward secondary share sales this summer, and it now allows current and former employees to participate equally in annual tender offers.

The company expects to allow more of these secondary sales, and it will need to tap private markets again in the future based on demand from investors and the capital-intensive nature of the business, according to a person familiar with this week’s tender offer.

OpenAI has faced increasing competition from startups like Anthropic and tech giants like Google. The generative AI market is predicted to top $1 trillion in revenue within a decade, and business spending on generative AI surged 500% this year, according to recent data from Menlo Ventures.

Last month OpenAI launched a search feature within ChatGPT, its viral chatbot, that positions the high-powered AI startup to better compete with search engines like Google, Microsoft’s Bing and Perplexity.