PYMNTS FinTech IPO Index Items Worst Displayed

Perhaps the best thing that can be said about this awful, no good, miserable week is that… it could have been worse.

The 13.5% decline in the FinTech IPO Tracker for the week comes, of course, in the same week as the Fed raised interest rates, and in the same week as retail sales fell and in the same week when employment figures were worse than expected.

But in our corner of the FinTech universe, among payment and platform companies, these stocks – to use a Wall Street concept – fell out of bed. The massacre seemed arbitrary, taking down companies that had news to report, and those that had no headlines.

A number of companies’ shares fell by more than 20%. Among these names: Opendoor’s shares fell by about 29%, as did the shares in Robinhood, while Hippo Insurance fell 24%.

FinTech IPO Index Performance YTD

As mentioned in this space, Robinhood showed $ 6.19 billion in cash and cash equivalents at the end of the first quarter on May 31st. Since its listing in July last year, Robinhood’s losses have topped $ 3 billion. The company has seen a number of downgrades on Wall Street over volatility in the stock market and the crypto market.

The shares of Upstart were 19% lower. As we reported last week, the Consumer Financial Protection Bureau (CFPB) ordered the termination of the Upstart Network from the list of approved “no action letters” (NALs). The NALs gave Upstart a special regulatory treatment by immunizing the lender from being charged with fair lending offenses with regard to the guarantee algorithm, while the NAL remained in force.

Also read: Upstart’s request to end regulatory immunity raises questions about CFPB’s tools

Payoneer also fell 19%, after reporting earlier this month that it had joined forces with Fiserv on cross-border payments. Businesses can now access Payoneer’s payout platform through Fiserv’s Carat operating system, reducing the associated costs of global payouts.

All news is bad news

We think you get the picture here: No news is bad news, all news is bad news … and investors have painted these companies’ shares with an arbitrary brush of negativity.

But again, what lies ahead is no steady path to profit, no steady path to top-line growth. For many of these FinTech upstarts who have become public in recent years (even ahead of the pandemic), the economy flourished, and transaction increases seemed inevitable.

But no one knows – with the rather limited operating history in place with the vast majority of these companies – what is happening in a recession. No one really knows what happens when transaction volumes go down. Or when the housing market crumbles up enough to (really) dent the platform models that match, for example, home buyers and home sellers. The inflation environment remains a wild card, and is warmer than most people expected. The fact that the index is down about 42% YTD says a lot about the concerns and concerns that are increasing.

Young companies populate our FinTech IPO landscape – but they gain a lot of experience, at once, and perhaps in ways no one would have wanted.