AltFi Fintech Index falls 0.56% in March

After two roller-coaster months, the AltFi Fintech Index registered a small loss in March. But under an apparent sea of ​​calm, a number of hackers were playing currents.

Image source: Pexels/Anna Nekrashevich

The AltFi Fintech Index was largely flat in March, falling 0.56 percent against a 3 percent return for global stocks as measured by the MSCI World Index.

While the net return of the AltFi Fintech Index, which consists of about 50 listed fintech stocks, suggests a subdued market, the reality was anything but.

Just under half of the included shares gave a positive return in the month. 11 of these stocks return double digits and three over 20 percent.

The best performer was Northern Data, a German provider of data centers to the crypto and blockchain industries as well as other high-growth sectors such as artificial intelligence, which also returned 7.7 percent in February.

Opendoor, a San Francisco-headquartered digital platform for residential real estate, gained 22.8 percent in the month of March. This follows a 40 percent fall in February as some sentiment returned for the company.

Marathon Digital Holdings, which operates in the mining of cryptocurrencies, has a market value of approx. 2 billion dollars.

A small majority of stocks lost money during March. While these were mostly single-digit declines, two stocks lost significant ground.

Katapult, an e-commerce-focused fintech founded by Chinedu Eleanya, Andrew Hancox and Brandon Wright in 2012 saw its share price plummet ahead of its Q4 2022 financial results.

During March, it fell, and ended the month down 53.9 percent.

Investors appeared jittery after reporting $48.8 million in revenue, down $24.5 million, or 33.4 percent, from the prior period.

Of the total decrease of $24.5 million, the company says that $9 million was the result of the introduction of new accounting rules for leases ASC 842 from January 1, 2022.

This further translated into a net loss of $14.4 million for the company for the fourth quarter of 2022.

While the company still expects to see originations grow in 2023, it also flagged that consumer headwinds are likely to persist.

“Historically, lease-to-ow solutions benefit from periods of shrinking prime credit availability, creating a counter-cyclical hedge against a challenging macro environment,” it said.

A number of constituents were reported to be songs exposed to the collapse of Silicon Valley Bank (not a portfolio constituent of the index).

SVB’s exit wiped out all value for its stock and bondholders, but depositors were protected after the US government stepped in at the weekend following news they were under pressure from a bank run.

According to Moody’s, in March there was the highest case of default on corporate debt in almost three years.

Mars’ defaults add to a total of 33 defaults for the first quarter of 2023. This is the highest quarterly number since the fourth quarter of 2020 and up from 25 defaults in the first quarter of 2022.

“Three US financial institutions defaulted in March: Silicon Valley Bank, its parent bank holding company SVB Financial Group, and Signature Bank. SVB was the first Moody’s-rated U.S. banking organization to default since 2015, when Doral Financial Corporation, a U.S. bank holding company, filed for Chapter 11 bankruptcy protection following the failure of its unrated banking subsidiary, Doral Bank.”

Moody’s pointed to the risk of interest rate and asset liability management, sector concentration and weak governance contributing to the SVB collapse.

But it added that most defaults appeared to occur outside the financial sector.