FinTechIPO™ Index Shows Continued Weakness vs Broader Markets

Continuing a trend seen in the past few weeks since we launched the FinTech IPO tracker, the group of 45 companies we’ve surveyed have, on the whole, underperformed the broader market.

At its latest reading, to start off the month of March, the tracker stands at 70.5 — and as a reminder, the “baseline” reading, set in the midst of the pandemic stood at 100. The read across here is that the group, en masse, has lost roughly 30%.

As noted last week, uncertainty plays a role here, where the uncertainty surrounds war in Europe, and by extension what happens in commerce, and to cross-border payments and to the continued digital shift in various parts of the connected economy.

Broader Markets are Down, Too

To be sure, the general benchmarks against which our tracker is measured are down as well. Year to date, the tech-heavy Nasdaq is down about 5%, and the broader S&P has declined about 11%.

A blanket case of negative sentiment may be masking incrementally positive news that the pillars of connectivity that we’ve detailed in PYMNTS’ digital pages are still being cemented.

nCino has been the top performer, as measured through the past week, with a return through Thursday (March 3) of more than 22%. The company said recently that SmartBank, a subsidiary of SmartFinancial, has moved to the nCino Bank Operating System, with a focus on simplifying commercial loans. SmartBank has $4 billion in assets.

And elsewhere, companies such as Affirm and Upstart have seen double-digit percentage point gains in the past week, with their latest quarterly reports in the rearview mirror seen last month.

Conversely, Opendoor Technologies shares have tumbled in the past week, down about 20% as measured through that period. The company posted results at the end of last week that missed expectations, and where net losses were 31 cents a share, outpacing the 18 cents per share in losses that the Street had expected. But drilling into results a bit, the company said that total homes sold in 2021 gained 119% to 21,725.

For many of these firms, as reflected in their stock prices, investors are parsing the details of the financials — which are, of course, backward looking — and mulling what happens in an environment of rising rates. At some point, consumer spending may be crimped by the specter (and the reality) of inflation. And, of course, for companies that make their money from, say, real estate transactions, increased mortgage rates eventually put a chill on property buying. Higher rates also increase the operating expenses of these companies (indeed, any company), which in turn means that for the firms that have yet to show operating profit, the red ink would continue.