I don't know how stripe does it , but employees want to know what his stock is worth and the company needs to know how much stock to give. Since we are private we just say "our internal best guess for our evaluation is $XXmillion therefore we will give you X number of shares worth $200k at this valuation. There is no finessing of the cap table. We have pre allocated a certain percentage of stock for employees, we issue out of that allocation.

I don't see an answer here for why reducing the unofficial internal valuation is bad except for the fact that they are saying we might not sell for as much anymore which affects all current stock holders if it ends up being true.

If they’re able to keep all things equal, with your example in mind, then they cushioned the employee pool at an earlier round and are burning through the shares faster than when the round closed. It’s a bandaid, the real hope hope is that the injury in terms of valuation is truly a scratch that won’t leave a scar.