In Turbulent Week, Blend’s 40% Drop Lowers FinTech Index
This week, bank runs weren’t the only thing that happened.
And since the FinTech IPO Stock Index fell for a second week, down 2.5%, the number of stocks that have made money so far this year is getting smaller. Since 2023 began, the index has gone up by just under 7%.
The Federal Reserve continues to raise interest rates by raising its benchmark rate by another quarter point. And as people talked about the big picture, Fed Chair Jerome Powell said, “Financial conditions seem to have tightened, and probably by more than the traditional indexes say.”
With credit getting harder to get, companies that are already facing pressures from the economy as a whole may face some bumps in the road. Recent financial reports show that no one is really out of the woods yet.
Difficult Macro Conditions
Over the last five sessions, Blend’s price fell by about 40%. The drop follows the company’s earnings report, which showed that revenue from its Blend Platform segment fell by $7.1 million, or about 19%, to $29.5 million. The volume of the mortgage market fell by 68% across the whole industry. With a bit more detail from the earnings report, we can see that Mortgage Banking’s revenue for the most recent quarter was $15.1 million, which is down by $14.0 million, or 48%, from the same time last year.
Consumer Banking & Marketplace brought in $13.2 million, which was up by $6.9 million, or 109%, and didn’t make up for all of these losses. The company also said that the Title365 segment’s revenue was $13.3 million, which was down $31.2 million, or 70%, from the same quarter in 2021. This was because interest rates went up, which caused fewer refinance transactions.
Nima Ghamsari, the head of Blend, told analysts on a conference call that “2022 was a very hard year for our industry because mortgage rates kept going up sharply and our customers’ margins got smaller.” We’ve learned that we’re not immune to the declines in industry volume, which have had an effect on our finances.
MoneyLion let go of 12.3%. The online lender announced that its Even Financial platform will now be called “Engine by MoneyLion.” This was written about in this space. In another place, in an interview with Karen Webster, Dee Choubey, CEO of MoneyLion, talked about the company’s most recent earnings. He said that digital ecosystems are being built across platforms to help consumers and businesses learn about money, investing, and saving.
“There’s a large swath of the U.S. population that finances themselves on a week-to-week basis,” he told Webster. MoneyLion said that the number of customers went up 97% from the previous year to 6.5 million, which is a 20% increase from the previous quarter. 65% of sales come from consumers and 35% come from businesses.
Alliances and Indexes
Upstart’s stock fell by 7%. The company said that the Upstart Macro Index has been released (UMI). According to a company release, UMI is meant to estimate how changing macroeconomic conditions, such as the rate of personal savings, inflation, and unemployment, affect how well Upstart-powered loans are paid back.
Marqeta went down by 5.4%. This week, the card-issuing platform announced a new partnership with Stables (formerly Tiiik), an Australian company, to power its new Mastercard prepaid card. Stables is a digital wallet that lets users spend, send, and earn stablecoins. Marqeta said in the announcement that customers of Stables will be able to turn stablecoins into fiat currency and use that fiat currency anywhere Mastercard cards are accepted, both online and in person.
Shares of Oportun went up by almost 47%, making up for at least some of the losses seen after its quarterly report, which we talked about here. As reported, sales for the December quarter went up 35% to $262 million. In the company’s financial report for the quarter, it said that there were 1.9 million members, which is up about 27% from the same time last year.
