FinTech IPO Index Extends Earnings-Led Downdraft as Marqeta Sheds 24%  

Investors were in a “shoot first, ask questions later” frame of mind this past week.

As for the FinTech IPO Index, earnings reports helped send the group down on yet another five-day journey that saw a 2.7% loss.

Platforms Take a Dive

Marqeta gave up nearly 24% in a week that saw earnings and reports of slowing growth remain top of mind for holders.  Despite the fact that the card-issuing platform company’s quarterly total processing volumes (TPV) were up 41% year over year to $47 billion, there are some headwinds in the mix.

Marqeta management said buy now, pay later saw slowing growth, though growth rates were still in the double digits. And many of the firm’s customers are tightening their own spending and credit requirements. Block continues to be a key customer, and accounted for 74% of the company’s revenues, which stood at $203.8 million — and the firms are in talks over Block’s contract, which is up for renewal in 2024. Consumer and business spending is slowing modestly into the current year, according to commentary on the call.

Opendoor shed 22.8%.  The downturn extended a decline that continued right into the end of last week, when the company reported earnings.  We noted that the company is in the sales process (at least in contract) to sell 66% of inventory that had been bought before the housing correction — and sees 85% of those homes to be sold/in the sales process during the current year.  In the meantime, the company reported a 25% drop in sales year over year in the most recent quarter. The company’s earnings materials show that 7,512 total homes were sold via that company’s platform, down 23% versus the same period in the prior year.

Open Lending slipped 20.8%. The company’s results showed a decline in loans facilitated: 34,550 certified loans during the fourth quarter of 2022, down markedly from 42,639 certified loans in the fourth quarter of 2021.  Revenues in the period declined to $26.8 million, down 48% from last year.  Near- and non-prime consumers, management said on the conference call, are being hit by rising rates and have less disposable income, while the loan rate on vehicle loans is increasing significantly.

Short-Lived Rallies

Even where there was some post-earnings initial Wall Street enthusiasm, it proved short-lived.  Lemonade lost 11.6%, retracing some of the gains initially made after the company reported earnings, as we noted in our own coverage, despite the fact that management said its customers are increasing both their number of policies and premiums per policy over time.  The company’s been “built for AI since day one,” Lemonade founder and CEO Daniel Schreiber told investors on the call.  The fourth quarter report showed that total customers were up 27% year over year to 1.8 million, nearly doubled from around one million in 2020.

Not every headline that sent shares lower was earnings-related this week. Robinhood was 4.5% lower.  As detailed here, the company revealed via SEC filing that the Commission is investigating the platform’s crypto line of business.

“In December 2022, following the bankruptcies of several major cryptocurrency trading venues and lending platforms … we received an investigative subpoena from the SEC regarding, among other topics, RHC’s [Robinhood Crypto] cryptocurrency listings, custody of cryptocurrencies, and platform operations,” the company’s Form 10-K stated. Robinhood Crypto is licensed to operate and provide retail investors with digital asset trading products across more than half of the U.S., the company has said, holding either a money transmitter license or a currency transmitter license in 28 states and the District of Columbia.

Separately, Payoneer gained 18%. The company remains sanguine about its B2B and cross-border prospects and trajectory.  During the company’s latest earnings report, the firm said its B2B accounts payable (AP) and accounts receivable (AR) volumes increased 39% year over year, representing 12% of total volume in 2022.  Management noted on the call that roughly two of every three Payoneer B2B AP/AR product customers are new to the Payoneer platform.