The CE 100 Stock Index lost 6.7% as Silicon Valley Bank collapsed during a dramatic week that raises questions about FinTechs and startup funding.
It remains unclear what the ripple effects will be from SVB’s failure — and how widespread they will be.
All pillars tracked by PYMNTS fell, led by the banking segment, which slid 10.6% last week.
Within that group, LendingClub lost 18.7% through the week. As detailed here, the company said in an SEC filing that it has about $21 million in deposits at Silicon Valley Bank and noted that the recovery of the funds “will be subject to the FDIC process.”
While the company also noted that the deposits are “not material” to the company’s liquidity position or capital levels (LendingClub lists $8 billion in assets), the SEC filing trains a spotlight on how many unknows there are out there right now in tech banking — and when (or perhaps even whether) SVB clients will be made whole.
We reported heading into the weekend that SVB has roughly $175 billion in deposits, 6% is held in private banking, and 30% is in early-stage tech.
“These are the founders and the high net-worth individuals, the tech shops that would be inclined to get their money out — but the question becomes where they will put it. The impact will be widespread, given that 11% of funds are held internationally,” we wrote.
The SVB news spurred investors to send shares in other banks lower. Ally Bank shares dropped 15.4% last week where Reuters reported that investors embraced defensive positions against several banking names (via put options).
And even some of the marquee names within banking, J.P. Morgan and Citigroup, gave up a respective 7% and 7.7%, while Goldman Sachs rounded out the week 8.2% lower.
The Pay and Be Paid Pillar followed the banking segment’s dip with a 9.2% loss. Affirm lost 23.9%, having noted on its website this week that it is exiting Australia. The BNPL provider launched in that country in 2021 by expanding its partnership with Peloton. As reported earlier this month, Peloton said it would end its relationship with Affirm in Australia and partner with Zip for BNPL financing.
Western Union gave up 13.4%.
PYMNTS reported that Western Union has teamed with MFS Africa to allow mobile money transfers across the continent. Regarding the mechanics of the partnership, Western Union users in 200 countries worldwide send funds to more than 400 million mobile wallets in the MFS network.
The Work pillar was 8.1% lower. DocuSign lost 23.7%. The company reported fourth-quarter results showing total revenue was $659.6 million, an increase of 14% year-over-year. Subscription revenue was $643.7 million, an increase of 14% year-over-year. But looking ahead, management has said that growth should be in the high single-digit percentage points, representing a slowdown. Commentary from the conference call with analysts shows that the macro environment for business spending has not improved.
WeWork shares lost 18.4%.
The New York Times reported that the company is in talks with investors to restructure more than $3 billion in debt and raise cash. The report cited two unnamed sources with knowledge of the discussions. And as reported, SoftBank, WeWork’s largest creditor and largest shareholder, is playing a “key role” in the negotiations.
Wayfair has reduced the time needed to curate product listings by 67%, saved hundreds of thousands of dollars and improved some conversion rates by 2% by deploying Google’s artificial intelligence (AI) technologies.
The online retailer shared these results in a Sunday (Jan. 10) press release emailed to PYMNTS announcing that it is using Google’s Gemini models on Vertex AI to enhance its product catalog and unlock “the next generation of retail experiences.”
“With Google Cloud, we’ve been able to efficiently scale and enrich our product catalogs, enabling us to support a more seamless and engaging shopping experience for our customers,” Wayfair Chief Technology Officer Fiona Tan said in the release.
Gemini on Google Cloud improved Wayfair’s time-to-market by automatically categorizing products across its 30 million product portfolio, delivered cost savings by eliminating the need to manually tag attributes like color and style, and improved conversion rates by increasing the accuracy of product attributes and improving the coverage of attribute tags in the retailer’s catalog, according to the release.
The technology also automatically catches errors in product dimensions and flags inappropriate materials, per the release.
Wayfair is also using Gemini for Google Workspace to boost employees’ productivity, according to the release.
The retailer is using AI features in this suite of productivity apps to draft and respond to emails, summarize and proofread documents, build presentation templates and gain expertise in new areas, per the release.
“By harnessing the power of Gemini and Google Workspace, Wayfair is not only automating complex tasks and boosting employee collaboration, but also creating more personalized and engaging experiences for every shopper,” Matt Renner, president, global revenue at Google Cloud, said in the release.
The rise of large language models (LLMs) has thrust generative AI into the driver’s seat of retail technologies, prompting brands to reassess their strategies, according to the PYMNTS Intelligence and AI-ID collaboration, “What Generative AI Has in Store for the Retail Industry.”
The report found that 92% of companies are using AI-driven personalization to drive growth and that 77% of business leaders rank generative AI as the most impactful emerging technology.