Why An Unsustainable Bubble Is Growing Inside Fintech |
The financial technology industry has become a world of haves and have-nots.
Take San Francisco payments company Stripe, which helps millions of merchants accept credit cards, process stablecoin transactions and manage billing tasks. In 2025, it brought in $6.9 billion of net revenue and $1.2 billion of earnings before factoring in interest, tax, depreciation and amortization expenses, according to a person familiar with its finances. Revenues were up more than 30% from 2024.
That’s world-class scale and growth, but its recent valuation of $159 billion, which has afforded each of the Collison brothers a $17.5 billion fortune, means its private backers think it’s worth nearly five times Adyen, a Dutch fintech and close competitor. Unlike Stripe, Adyen is publicly traded. It processed $1.6 trillion in payments last year compared with Stripe’s $1.9 trillion. Stripe loyalists will point out that it has more business lines than Adyen and is growing faster off of a larger base. But the chances that Stripe could maintain a $159 billion valuation if it went public today are slim. Public investors value e-commerce platform Shopify at $165 billion, and it grew nearly as fast as Stripe last year and had more than double the profits. A Stripe spokesperson declined to comment.
New York-based corporate-card company Ramp is another “have” among fintechs that carries a head-scratching price tag. In September 2025, it announced $1 billion in annualized gross revenue and two months later, fetched a $32 billion valuation. Here’s what many observers don’t realize: its gross sales figure doesn’t subtract out the card-swipe interchange fees and rewards that Ramp gives back to banks, other partners and customers. So Ramp’s net revenue, the top-line sales metric reported by most publicly traded payments companies, is likely at least 40% lower than its gross revenue. That means its net-revenue valuation multiple was probably around 50 (or higher) as of last fall, a level reminiscent of fintech’s 2021 bubble days. Ramp’s head of communications Lindsay McKinley declined to comment on the company’s net revenue but said it’s growing by more than 100% annually and is cash flow positive.
Ramp’s corporate-card rival Brex had 30% less revenue than Ramp as of September 2025. Four months later, in January 2026, Brex was valued at $5.15 billion when Capital One announced it would acquire it. Even with its impressive growth, is Ramp worth six times Brex?
Michael Gilroy, a former general partner at investment firm Coatue and founding partner of venture capital shop Marathon, says the valuations for top private fintechs “are beyond nonsensical.” He adds: “They’re not even in the zip code of what they’d trade at as public companies.”
According to Caplight, a San Francisco startup that tracks secondary-market trades of private tech companies and provides a venue to trade shares, the collective market value of the top 10 largest private fintechs has jumped 164% over the past 12 months, compared with a 2% rise for the top 10 publicly traded fintechs. In many ways, the dynamics of public versus private fintech valuations are representative of a large shift toward private capital markets. Decades ago, initial public offerings were seen as a crowning achievement for startups that maximized market value for them and their backers. However, there are now thousands of private equity firms and venture capitalists competing for deals and investments in private markets that are growing much faster than public markets. This has driven up private-market valuations, especially in red-hot areas like artificial intelligence.
Most of the fintechs that have graduated to the public markets recently have seen their stocks stagnate or slump. Digital bank Chime, once valued at $25 billion during fintech’s 2021 peak, went public in June 2025. Over the past six months, it has been trading at a market cap ranging from $7 billion to $11 billion, well below the $16 billion reached on its first day of trading. Of the 11 fintechs that went public last year, only three are trading above their IPO price, according to Rocio Wu, a partner at VC firm F-Prime Capital.
One circumstance helping drive the continued rise of fintechs’ haves is the companies’ skillfully crafted narratives around artificial intelligence. Stripe and Ramp have convinced investors that the AI wave will boost their business, continuously blasting out press releases about AI agents and other AI-centric features. Klarna, the publicly traded buy-now, pay-later company based in Stockholm, has tried to do the same, with billionaire cofounder and CEO Sebastian Siemiatkowski even saying his company is already using AI to replace enterprise software from tech giant Salesforce. His public-market investors have remained skeptical. Klarna is now trading at a $6 billion market value, down significantly from both its IPO price and 2021 private-market valuation of $46 billion.
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As AI dominates the investment narrative, a stampede of private capital is chasing a shrinking number of companies that have been deemed winners of the AI revolution. Big institutional investors see that the stock market’s returns over the past 10 years have been driven by seven names, says Annie Lamont, cofounder and managing partner of VC firm Oak HC/FT. Those investors want to hitch a ride on the next Meta or Google. So sovereign wealth and pension funds are starting to invest directly in the OpenAIs and Stripes of the world, which is driving valuations higher, she says.
Immad Akhund, founder and CEO of Mercury, a fast-growing digital bank for businesses, has a front-row seat to how tech startups are faring. While all the money is flowing to AI businesses and fleeing from anything considered vulnerable to disruption by AI, investors aren’t interested in the third bucket of companies that aren’t being propelled or crushed by AI, he says. “I’m an investor in lots of companies that are not necessarily playing in AI, and even if they're doing really well, they just can't raise money right now.”
Steve McLaughlin, the founder and CEO of fintech-focused investment bank FT Partners, says that over the past couple of months, hopes and concerns about AI “have gotten more pronounced than ever, and it's creating a fog for both investors and companies to determine the opportunities and risks.”
Investors worry that tomorrow, Anthropic will release features that make entire fintech companies obsolete. Fintech founders trying to raise money need to have an AI story, says Oak HC/FT general partner Matt Streisfeld.
Meanwhile, the upper-echelon fintechs have become like scarce luxury goods whose prestige and demand rise as their share price goes up, says Michael Tannenbaum, CEO of fintech lender Figure, which went public last year.
The implications of this trend? Initial public offerings will probably become rarer, and U.S. stock market investors will have fewer opportunities to participate in tech companies’ extreme wealth creation as they did years ago. There’s also a risk of a valuation reckoning when the AI bubble deflates. Venture capitalist Annie Lamont says, “There's definitely a suspension of disbelief, because many of these private investors aren’t getting quarterly numbers from the companies they invest in. It’s a bit of a blind box that they’re investing in.”