PYMNTS-MonitorEdge-May-2024

FinTech IPO Index Stumbles Into Earnings Season With 3% Weekly Drop

For the FinTech IPO names, now comes the true test.

Earnings season.

Wednesday, JPMorgan signaled that the U.S. remains in good shape, in terms of credit and propensity to spend. But macro headwinds loom, which have spurred the banking giant to boost its reserves.

And that might be a read across for the financial services sector at large, and by extension our FinTech IPO tracker, because these names are depended on some of those same trends.  Consumer spending, of course, drives transaction volumes across platforms and apps.

Despite the positive commentary on the call, management on the JPM earnings discussion said that the company had taken $428 million in additional loan loss reserves (which now stand at $1.1 billion), in anticipation of volatility amid inflation and at least some pressure stemming from inflation. CEO Jamie Dimon said in his own commentary that the global economy is likely to see impact on global liquidity from quantitative tightening and geopolitical events including the war in Ukraine.

The FinTech group, as tracked by PYMNTS, was down 3% on the week, with a year-to-date performance logging a dismal decline of nearly 43%.

Putting the past five sessions into perspective, most names declined — yet the descent was blunted a bit by the fact that Triterras surged by 41% on the week.

As noted in this space in recent days, Triterras is partnering with digital lower trade, groceries and marketplace platform Conektr to give micro- and small retailers increased access to working capital across the United Arab Emirates.

That access comes through the inventory management tool on the Conektr app.  As the companies said this week, through the Triterras’ Invoice Bazaar platform, small businesses in the fast-moving consumer goods (FMCG) space get more access to working capital for procurement through an all-digital process with know-your-customer (KYC) requirements. More than 7,000 retailers throughout the region are being targeted through the initial rollout.

Read also: Conektr, Triterras Team to Bring UAE SMBs More Working Capital

That lone name’s gains were trailed by Flywire, which logged a 7% increase on the week. The company has said that it has completed the acquisition of Cohort Go. Cohort Go operates as an education payments provider, and the deal will build on existing education business to accelerate the growth of its agent focus and team, the companies said in a joint release.

These, and other, positive returns through the week were not enough to offset the decliners.

Upstart, notably, sank 24%, driven lower in part by a downgrade from Goldman Sachs. Elsewhere in the week, the company said that it had partnered with Midflorida Credit Union on personal loans.

OneConnect shares were down a bit more than 20%, continuing a slide seen after the company successfully pursued a dual listing in the U.S. and on the main Hong Kong Stock Index.

In the weeks ahead, top line momentum and earnings — and worries about the macroeconomy —will drive sentiment, and by extension the FinTech IPO group’s stock prices.

PYMNTS-MonitorEdge-May-2024