FinTech IPO index rises 10.5% as SoFi rally

Tech stocks roared back to life entering a new month — and suddenly February is looking a lot brighter than the beginning of this year ever did.

The FinTech IPO index was up 10.5%, marking a five-day rally that has brought the group up more than 35% so far this year.

There’s a big uptick coming from 2022, when the index was halved, but again, there’s a long way to go before these IPOs get off the “bust” list. The vast majority of the nearly three dozen names on our list are still trading below the asking price—and nearly all of them the The names have been reduced by two digits from the IPO levels.

SoFi reported results that helped the stock gain more than 35% over the past five sessions. And as we noted, demand for personal loans, direct deposit accounts and “cross-buy” opportunities boosted SoFi Technologies’ results despite macro headwinds. Total deposits at SoFi Bank grew 46% sequentially during the fourth quarter to $7.3 billion.

Management said on the conference call that 88% of SoFi Money deposits — across checking, savings and SoFi Money cash management — came from direct deposit members. Personal loan originations of nearly $2.5 billion in the fourth quarter of 2022 increased by nearly $820 million, or 50%, offsetting 72% declines and 84% declines in student loans and mortgages, respectively.

On the call with analysts, CEO Anthony Noto said that the diversification of its revenue streams and the fact that the company received a national banking license last year allowed SoFi “to be incredibly flexible in a rapidly changing environment.”

And in a nod to the IPO market (this piece do covers the FinTech IPO market, after all) SoFi may have some plans of its own. Noto said that for SoFi, another line of business that could open up “is that if the IPO market opens up, we can underwrite IPOs. … We are the sole distribution channel for the Riviana IPO. … Our members want access to IPOs, and we provide Main Street access to stock market listings.”

Take steps in the middle of macro headwinds

Other companies saw shares rally on admissions that they are struggling with macro challenges – but that they are taking steps to adjust and right-size their operations.

Upstart Holdings rallied 36% after the company said this week it was laying off 365 employees due to reduced demand for lending. The staff reductions amount to approximately 20% of the company’s workforce. Upstart also plans to halt development of its small business loan product “until macroeconomic conditions improve,” according to documents filed with the Securities and Exchange Commission.

nCino said the SimpleNexus company — which provides a platform for real estate agents including agents and loan officers — said FI AmeriCU will implement Nexus Engagement, Nexus Origination and Nexus Closing offerings “to provide a streamlined, mobile-first member experience.” The stock was 17% higher during the week.

Shares in Hippo Insurance rose 23.2%. The company said at the end of the month that it has launched Hippo Builder Insurance Agency (HBIA). The new agency leverages Hippo’s proprietary technology to allow builders of all sizes to partner with HBIA and, in the company’s language, “generate a predictable revenue stream.”

In a small deal, Marqeta said it will buy card management platform Power Finance in a $275 million deal. Marqeta’s share rose 3.7 percent. The 2-year-old Power, we reported in the wake of the deal, offers a cloud-based platform that provides companies with credit card management services as they launch new card programs.

Not all names were higher on company-specific news. Lufax Holding, listed in the USA and based in Shanghai, has applied for a stock exchange listing in Hong Kong. The stock fell 1.2% over the past five sessions.