FinTech IPO Index Down 3.7% as Tech Stocks Continue Carnage
The collapse of tech equities on Thursday perfectly encapsulates the challenges faced by FinTech IPO brands And succinctly encapsulated them.
Fears of more rate rises were stoked by economic statistics, which showed the third quarter’s 3.2% year-over-year growth in the US GDP. Since the inflation rate is still high and the report exceeded expectations by 2.9%, the Federal Reserve’s commitment to raising interest rates well beyond 2023 appears guaranteed.
The threat of more rate increases feeds concerns about headwinds for platforms and digital-only upstarts that claim to “makeover” rate-sensitive verticals like real estate, banking, and trading.
One Week Remains
In response, the FinTech IPO enters the last week of the year down 3.7% over the previous five sessions and is already down more than 52% for the year. And those names that are rate-sensitive? Triterras, a trade financing company, lost 28% of its weekly value, while residential real estate-focused Opendoor lagged closely behind with a 26% drop. Creating personal loans and selling them to investors might encounter challenges if these investors expect better income in a higher-rate environment, as seen by Upstart’s 16% loss over the same period.
According to company estimates, OppFi lost 7.7% in a week when FinTech, which focuses on consumer lending, closed a $150 million credit facility with a Castlelake subsidiary as the lender. According to the business, the credit would allow OppFi to finance receivables expansion.
Nuvei dropped by roughly 8%. The Canadian company Nuvei and Holland Casino have expanded their cooperation to make prompt payments possible for Dutch players, as was mentioned in this space at the end of last week. The cashier’s integration of SEPA Instant Credit Transfer makes payments possible, and users may immediately access their accounts for money.
Futu suffered a loss of under 7% after suggesting a dual listing of its Class A shares on the Hong Kong Exchange.
The purchase of Billtrust by EQT Private Equity has been finalized, which may be a portent of things to come for FinTechs and an indication of an exit route that struggling FinTech brands may want to consider. The B2B order-to-cash software company has halted operations due to the go-private deal. The all-cash deal, which comes one year after Billtrust went public and started trading on Nasdaq, puts the company’s stock at around $1.7 billion.
The few stragglers who managed to squeeze out profits during the previous five trading days were overwhelmed by the losses in the names above.
Katapult increased by 1%, and The omnichannel retail firm said in a statement that it has teamed up with iBUYPOWER, a manufacturer of high-end custom gaming PCs with flexible payment plans.
The most noticeable increase, local, increased by 14%. This week, the firm addressed claims made in a report by short-seller Muddy Waters Capital last month. The company also announced implementing a share repurchase program for up to $100 million of its stock.
“We maintain separate bank accounts for merchant cash and our own cash. We have not used merchants’ cash to make loans to our senior leadership or to pay dividends to our shareholders,” the company said. Additionally, dLocal noted that it has been consistent and open in determining, disclosing, and comparing its overall payment volume.
