Blend’s 40% decline leads to a lower FinTech index

Bank runs were only part of the story this week.

And as the FinTech IPO stock index fell for another week, down 2.5%, the year-to-date positive return has diminished. The index has risen by just under 7% since 2023 began.

Interest rates continue to receive a boost from the Federal Reserve, which raised its benchmark interest rate by another quarter of a point. And amid comments on the macro picture, Fed Chair Jerome Powell noted, “Financial conditions appear to have tightened, and probably more so than the traditional indices suggest.”

With a tightening of credit, companies that have already struggled with macro pressures may see some bumps ahead. Recent performance results emphasize that no one is really out of the woods just yet.

Tough macro prints

Blend dropped around 40% over the last five sessions. The decline comes after earnings that showed the company’s Blend Platform segment revenue came in at $29.5 million, down $7.1 million, or about 19%. The mortgage market fell by 68% across the industry. With a little more detail from the earnings results, last quarter Mortgage revenues were $15.1 million, down $14.0 million, or 48% year over year.

These declines were only partially offset by Consumer Banking & Marketplace revenues, where those numbers were $13.2 million, up $6.9 million, or 109%. The company also noted that Title365 segment revenue was $13.3 million, down $31.2 million from the corresponding fourth quarter of 2021; or 70%, reflecting the increase in interest rates and the corresponding decrease in refinancing transactions.

Nima Ghamsari, head of Blend, said on the conference call with analysts that “2022 was an extremely challenging year for our industry as we continue to see a sharp increase in mortgage rates and margin compression for our customers. We have learned that we are not immune to the volume declines in the industry, which naturally affected our financial results.”

MoneyLion gave up 12.3%. As noted in this space, the online lender announced a new name for its Even Financial platform, which will now be known as “Engine by MoneyLion.” Elsewhere, and as detailed in an interview with Karen Webster, Dee Choubey, CEO of MoneyLion, when discussing the company’s latest earnings results, noted that digital ecosystems are being forged across platforms that act as an intersection for consumers and businesses to educate about finance, investment and savings.

“There’s a large portion of the American population that funds itself on a week-to-week basis,” he told Webster. MoneyLion has reported that total customer numbers increased 97% year-over-year to 6.5 million, representing 20% ​​sequential growth (65% of sales coming from consumers, 35% from businesses).

Partnerships and Index Announcements

Shares in Upstart fell 7%. The company said it has launched the Upstart Macro Index (UMI). The UMI, according to the company’s release, is designed to estimate how changing macroeconomic conditions, such as the personal savings rate, inflation and unemployment, affect the credit performance of startup-driven loans.

Marqeta was 5.4% lower. In news this past week, the card issuing platform announced a new partnership with Australia-based Stables (formerly Tiiik) to power the new Mastercard prepaid card. Stables is a digital wallet that allows users to spend, send and earn stablecoins. Marqeta said in the announcement that through the partnership, Stables’ customers will be able to convert stablecoins to fiat and use that fiat wherever Mastercard cards are accepted both online and in physical locations.

Oportun shares rose nearly 47%, recouping at least some of the losses seen after the quarterly report, where we spotlighted the numbers here. As reported, revenue rose 35% in the December quarter to $262 million. The company’s financial presentation revealed that its members in the quarter were 1.9 million, an increase of about 27% year over year.