Daily Brief: You Can’t Have An Online Shopping Boom Without An Online Payments Boom

Daily Brief: You Can’t Have An Online Shopping Boom Without An Online Payments Boom

almost 3 years ago3 mins

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Stripe’s been keeping busy in lockdown even if you haven’t: the payments company announced over the weekend that its value has almost tripled in the last year.

What does this mean?

Stripe sells software that enables its many business customers – including Amazon, Uber, and Instacart – to accept online payments. And while the company doesn’t say exactly how many transactions those customers are making, it has revealed that more than 50 of them each use its platform to process over $1 billion a year. Consider then the recent surge in online shopping, and Stripe’s new valuation might not come as much of a surprise: it jumped from $36 billion in April last year to $95 billion in its latest fundraising round.

Stripe’s payment volume has grown quickly

That officially makes it America’s most valuable private startup, and the company reckons it’s just getting started: analysts are expecting only 15% of shopping in the US to be online this year, and 13% in Europe – leaving plenty of room for Stripe to keep growing.

Why should I care?

Zooming in: A company’s only as promising as its future plans.

Stripe has bigger ambitions than just expanding its payments business, mind you: the company announced in December that it’d be expanding its business lending platform, as well as teaming up with investment banks like Goldman Sachs and Citigroup to offer checking accounts for its online business customers. It’s probably hoping this broader offering will give it a competitive edge in the fast-growing – and cutthroat – payments industry.

For you personally: How to profit from the uptick in digital payments.

Stripe is notoriously tightlipped about when it might list on the stock market, but there are plenty of other publicly available options to tide you over in the meantime: PayPal, Square, and Adyen have, on average, seen their share prices climb more than four times as much as traditional banks and payment companies – think Visa and Mastercard – over the last twelve months.

A rising tide

Keep reading for our next story...

Extended Stay America Was Bought By Two Investment Companies

Extended Stay image

Two major investment firms agreed to buy hotel operator Extended Stay America on Monday, in hopes that getting into bed together will lead to a good time.

What does this mean?

The hotel industry hasn’t exactly been doing well recently, but investment firms Blackstone and Starwood seem to think it’s only a matter of time before travel – and by extension hospitality – picks back up. So much so, in fact, that they offered to pay $6 billion for Extended Stay – 15% more than the company was worth on Friday, and the biggest sale the hotel sector’s seen since the pandemic began. And there are signs they’re right to be so optimistic: Friday was the busiest day for American airlines since March last year.

Extended Stay America stock
Source: Google Finance

Why should I care?

For markets: Affordability and long stays are the key.

Extended Stay has something else working in its favor: the hotel chain offers, well, extended stays at reasonable prices, meaning it tends to attract guests no matter how the economy’s doing. In fact, it managed to fill 75% of its rooms on average last year, even as the rest of America’s hotels only filled 44% of theirs. That might be one of the reasons why its shares have gained 30% since February last year, compared to just 2% and 12% for giant rivals Marriott and Hilton respectively.

The bigger picture: You might’ve missed your chance with the travel sector.

Get the sanitizer, because the travel bug seems to have spread across the Atlantic: one major index of European travel and leisure stocks erased all its pandemic losses and reached an all-time high on Monday. That’s not to say there are no cheap stocks in the travel sector any more, but they might be cheap for good reason: airline stocks, for example, are still some way off pre-pandemic highs, but they’re burning through cash and have a lot of government debt to repay.

Rebound route
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