FinTech IPO Index Falls 3.7% As Tech Stocks Fall
The rout that tech stocks faced on Thursday captures all the pressure facing FinTech IPO names… and caught them in a nutshell.
Economic data fueled fears of continued interest rate hikes, as US GDP rose 3.2% year-on-year in the third quarter. That report beat estimates of 2.9%, and with inflation remaining at high levels, the promise of Federal Reserve rate hikes well into 2023 seems assured.
The specter of continued interest rate hikes is fueling fears of headwinds for the platforms and digital-only upstarts that promise to “take over” interest-rate-sensitive verticals such as real estate and lending and trading.
One week left
In addition, the FinTech IPO in the final week of the year is down 3.7% over the last five sessions – and is more than 52% lower year-to-date. As for the rate sensitive names? Trade finance firm Triterras fell 28% for the week, and residential real estate-focused Opendoor followed close behind with a 26% loss. The upstart gave up 16% over the same time frame, as its model of originating personal loans and selling them to investors could face headwinds as those investors demand higher returns in a higher interest rate environment.
OppFi lost 7.7% in a week that saw the consumer credit-focused FinTech close a $150 million credit facility with a subsidiary of Castlelake as the lender, according to company reports. The company said the facility will enable OppFi to finance receivables growth.
Nuvei fell around 8%. As mentioned in this space late last week, Nuvei, based in Canada, and Holland Casino have expanded their partnership to enable instant payouts to Dutch players. The payments are activated by integrating SEPA Instant Credit Transfer into the cash register, and funds can be immediately accessed from user accounts.
Futu lost just under 7%, after proposing a dual listing on the Hong Kong Exchange of its A shares.
And in a sign of what may lie ahead for FinTechs – in an exit strategy that could become a consideration for beleaguered FinTech names – the acquisition of Billtrust by EQT Private Equity has been completed. The go-private transaction means the B2B order-to-cash software provider has ceased trading. The all-cash transaction values Billtrust’s equity at about $1.7 billion and comes a year after the company went public and began trading on Nasdaq.
The losses in the above names swamped the few stragglers who managed to extract gains in the last five trading days.
Catapult was up 1%, the company, which focuses on omnichannel retail, said in a release that it has partnered with iBUYPOWER, which manufactures custom high-performance gaming PCs on flexible payment options.
The most notable gainer was dLocal, which rose 14%. The company responded this week to allegations made in a report by short seller Muddy Waters Capital last month and also said it has initiated a buyback program for up to $100 million of the company’s stock.
“We have separate bank accounts for merchant cash and our own cash. We have not used merchant cash to make loans to our senior management or to pay dividends to our shareholders,” the company said. dLocal also said it has been consistent and transparent about how it calculates and reports total payment volume and comparisons by cohort.
How consumers pay online with stored credentials
Convenience prompts some consumers to store their payment information with merchants, while security concerns give other customers pause. For “How We Pay Digitally: Stored Credentials Edition,” a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 U.S. consumers to analyze the consumer dilemma and reveal how merchants can win over holdouts.
