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Stripe slashes valuation, Better.com to go public via SPAC

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Yahoo Finance tech reporter Allie Garfinkle breaks down Stripe slashing its internal valuation and layoffs in the tech industry.

Video Transcript

SEANA SMITH: The Wall Street Journal reporting the payments giant cut its internal valuation by 28%. Yahoo Finance reporter Allie Garfinkle is on the story for us. And Allie, we certainly have been covering this sector that Stripe is in. The publicly traded companies, PayPal being one of them, off about 60% since the start of the year. So maybe this doesn't come as a huge surprise, but certainly, it's a massive challenge here for Stripe.

ALLIE GARFINKLE: Absolutely, and there are similarities and differences between what we've seen at Stripe and what we've recently seen at Klarna. You know, Stripe today cutting valuation internally at 28%. There is a similarity with Klarna in the sense that that was a company that was really hot. And that's-- and sentiment's really cooled.

But the thing I want to emphasize is that this is an internal valuation. It's the price that's being used to price employee stock options, not investor shares. So, in that sense, it's really different. The headline to me, Seana, is that it's still really difficult for companies out there trying to get the funding to operate optimally. It's rough.

DAVE BRIGGS: All right, Allie, now infamous for those mass layoffs, Better.com announced today that it would go public via SPAC. How surprised were you by this?

ALLIE GARFINKLE: Initially, Dave, I was really surprised. SPAC activity has really been down. So when I saw the announcement, I was like, um, OK. But upon looking into it, actually, this has been coming for a while. Back in May, The Wall Street Journal actually reported that Better was looking into going public in a SPAC that would value the company at about 7 billion. So in that sense, not surprising.

But as you said, it's a weird moment for Better. They have been subject to all kinds of backlash for how they've handled layoffs. The most famous case, of course, was the situation where CEO Vishal Garg laid off 900 people in a famously mishandled Zoom call around Christmastime. So, in the end, not surprising. We actually did know this was coming. But it's an odd moment for Better, and even stranger, more difficult moment in the markets as a whole.