FinTech IPO Index Sinks 3.3% as Economic Concerns Overshadow Earnings Season

The investing world is parsing the slew of earnings that are continuing to come from banks, from the payments networks.

And  thus far, while earnings announcements have yet to pick up within our coverage, via the FinTech IPO Index, we might assume that the names are moving in sympathy to what their financial services brethren are saying.

Inflation, of course, is picking up. Interest rates are on the rise in an effort to blunt at least some of that inflationary impact. Consumer spending remains buoyant but there’s still the specter that demand across all avenues of commerce can (perhaps must?) slow.

As noted in this space earlier this week, the FinTech space is in the midst of a big chill, shedding half a trillion in valuation as the cumulative value of shares of newly-listed firms in the sector dropped $156 billion so far this year.

To that end, and in further illustration of the choppy trading the Index slipped 3.3% for the week, and now stands 40.5% lower for the year.

It should be noted that the companies that we cover are equal weighted in the Index, which means that the companies with even the smallest capitalizations have the same impact of their much larger peers.  And in some cases, the more outsized movements in our universe were not necessarily accompanied by company specific news.

Blend sank 20% on the week. Opendoor Technologies was off by about 16%, and it may be the case that worries over a housing slowdown are impacting that stock. Upstart lost nearly 14%.

OneConnect was 13% lower. This past week, the company said that it launched an all-in-one digital banking solution, OneCosmo in partnership with Brazilian FinTech Pismo. The solution, as the companies said this week, offers digital identity verification, core banking and other services.

These losses were more than enough to offset the 11% rally seen with FinWise Bank. The company posted its most recent quarterly results this week. The company said that loan originations were $2.1 billion, compared to $2.5 billion for the quarter ended March 31, 2022 and $1.4 billion in the prior year period. Net interest income was $12.8 million, compared to $13.0 million for the quarter ended March 31, 2022 and $10.8 million in the prior year period.

Katapult advanced roughly 9%, on the heels of news that it has hired Reid Bork as its new chief revenue officer. He had previously been vice president and general manager of Sezzle.

Elsewhere, Brazilian brokerage XP said that it expects to open its digital assets trading platform to clients by mid-August, initially offering bitcoin and ether but with plans to expand it by the end of this year, as had been reported by Yahoo Finance.

And separately, Enfusion announced the launch of Enfusion Express, a lightweight yet institutional-grade SaaS order and execution management system tailored specifically to the needs of smaller fund managers typically with less than $100 million in AUM. Shares were down nearly 2% through the week.