No letup here …
Fresh into a new quarter, the FinTech IPO Index continued its decline, having slipped 5% on the week, outpacing the roughly 2% drop seen in the broader markets, and worse than the nearly 3% drop in the Nasdaq.
As of this writing, the average name on our list of FinTech initial public offerings (IPOs) is down 27% from the initial trading day — signaling that, by and large, the companies here are trading as “busted” IPOs. In fact, only a few names are trading with positive returns. That includes Upstart, which is up 230% since its listing; Open Lending, which has gained 33%; FinWise, up 34%; and Bill.com, up a staggering 499%.
Drilling down into the most recent company-specific news, Blend Labs posted fourth-quarter earnings results that showed revenues of $81 million, which outpaced the Street at just under $80 million. Blend Platform segment revenues were up 19% year on year, as noted in the earnings release.
The company said in its separate earnings supplementals that consumer banking transactions were up 376% year over year, and consumer banking and marketplace revenues gained 46% to $6.3 million year over year. Mortgage related revenues surged by 14% year on year to $29.1 million.
Separately, shares in Chinese real estate platform firm KE Holdings have been volatile in recent days, on the heels of reports that Chinese regulators have been considering plans that would permit U.S. regulators to examine the audits of some of those listed companies.
Read also: China Regulators Tell Alibaba, Other U.S.-Traded Firms to Prep for Audit
This week, sell-side firm MoffettNathanson said “longer-term growth trajectories are likely to disappoint” at two companies in particular: Toast and Affirm. Toast was initiated with a “sell” rating and Affirm with a “neutral” rating.
We wrote on Wednesday that “sell” ratings are relatively rare on Wall Street, and in Toast’s case, the analysts initiated the name with a $19 price, which would represent a significant decline from the $24 that had been seen Monday. Toast, as recently estimated in our index, is off by more than 60% from its IPO price.
MoffettNathanson has pointed to Toast’s reliance on the restaurant industry as akin to being exposed to a “relatively narrow slice” of payments. Competition is growing in the space, where for example, Paerpay, a contactless payment solution for restaurants, announced that it closed $3 million in seed funding led by MassMutual through its MM Catalyst Fund, alongside several other investors.
Toast’s neutral rating from the sell-side company also reflects heightened competition. Affirm raised its outlook last month, up from guidance it had initially given in February. Affirm now forecasts fiscal third-quarter revenue of at least $335 million, up from the previous forecast of $325 million. The company said that its credit losses have been performing better than had been expected.
New Listings, Too
New listings are on the horizon, too — though in this case, not (yet) on the U.S. exchanges. GoTo Group has gotten the go-ahead to list its shares publicly in an initial public offering (IPO) that would be worth as much as $1.1 billion.
GoTo has estimated in recent announcements that its ecosystem contributed 2% of Indonesia’s GDP and its offered services address two-thirds of the country’s household consumption.
Pro forma gross transaction value of $28.8 billion in the 12 months ended Sept. 30 has translated to revenues of about $1 billion over the same period. The company estimates that its on-demand services total addressable market (TAM) is expected to grow from about $5.4 billion in 2020 to about $18 billion in 2025.
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