FinTech IPO index declines as Marqeta loses 24%

Investors were in a “shoot first, ask questions later” frame of mind this past week.

As for the FinTech IPO index, earnings reports helped send the group down another five-day journey with a 2.7% loss.

Platforms Take a dive

Marqeta gave up nearly 24% in a week as earnings and reports of slowing growth remained important to owners. Despite the card-issuing platform company’s quarterly total processing volume (TPV) increasing 41% year-over-year to $47 billion, there is some headwind in the mix.

Marqeta management said buy now, pay later slowing growth, although growth rates were still in double digits. And many of the firm’s customers are tightening their own spending and credit requirements. Block remains a key customer, accounting for 74% of the company’s revenue, which was $203.8 million — and the firms are in talks over Block’s contract, which is up for renewal in 2024. Consumer and business spending are down modestly this year , according to the commentary on the call.

Open storage 22.8%. The decline extended a decline that continued into the end of last week, when the company reported earnings. We noted that the company is in the sales process (at least in contract) to sell 66% of its inventory that was purchased before the housing correction – and sees 85% of those homes to be sold/in the sales process this year . Meanwhile, the company reported a 25% year-over-year decline in sales in its most recent quarter. The company’s revenue material shows that a total of 7,512 homes were sold via the company’s platform, down 23% compared to the same period last year.

Open lending fell 20.8 per cent. The company’s results showed a decline in arranged loans: 34,550 certified loans during the fourth quarter of 2022, down significantly from 42,639 certified loans in the fourth quarter of 2021. Revenue during the period fell to $26.8 million, down 48% from last year. Near and non-primary consumers, the management said at the conference call, are affected by rising interest rates and have less disposable income, while the interest rate on car loans is increasing significantly.

Short-term conventions

Even where there was some post-earnings Wall Street enthusiasm, it proved short-lived. Lemonade lost 11.6%, restoring some of the gains initially made after the company reported earnings, as we noted in our own coverage, despite management saying its customers are increasing both the number of policies and premiums per policy over time. The company has been “built for artificial intelligence since day one,” Lemonade founder and CEO Daniel Schreiber told investors on the call. The fourth quarter report showed that the total number of customers increased by 27% year over year to 1.8 million, almost doubling from around one million in 2020.

Not every headline that sent stocks lower was earnings-related this week. Robinhood was 4.5% lower. As detailed here, the company revealed via SEC filing that the commission is investigating the platform’s crypto business.

“In December 2022, following the bankruptcies of several major cryptocurrency trading venues and lending platforms … we received an investigative subpoena from the SEC regarding, among other things, RHCs [Robinhood Crypto] cryptocurrency listings, custody of cryptocurrencies and platform operations,” the company’s Form 10-K said. Robinhood Crypto is licensed to operate and provide retail investors with digital asset trading products across more than half of the United States, the company has said, and holds either a money transmitter license or a currency transmitter license in 28 states and the District of Columbia.

Separately, Payoneer got 18%. The company remains aware of its B2B and cross-border prospects and trajectory. During the company’s most recent earnings report, the firm said B2B accounts payable (AP) and accounts receivable (AR) volumes increased 39% year-over-year, representing 12% of total volume in 2022. Management noted on the call that roughly two of one in three Payoneer B2B AP/AR product customers are new to the Payoneer platform.