Thus far, nearly toward the end of the first quarter of 2022, we see a trend emerging for the FinTech IPO tracker.
That trend is: Down. To new lows.
As of 4 p.m. on March 9, the Index’s most recent reading was 62, which indicates a decline of about 28% since the start of the year.
No surprise here: Earnings continue to dominate headlines, sending some names skyrocketing (but not enough to pull up the index’s overall performance) and several stocks further into the red.
Among the most notable gainers in the past week: Triterras surged by more than 280%, albeit off a small base (the market cap, even post-surge, is about $127 million). The company posted earnings this week that saw the Singapore-based FinTech’s top lines grow by more than 228% to $55.5 million. Adjusted earnings before interest, taxes, depreciation and amortization — a very rough measure of cash flow — was up 78% to $27 million. The company said that total transaction volumes were up 163% to $10 billion. Transactions related to trade finance were up 106% to $7.5 billion.
In terms of positive returns, Triterras was trailed, significantly, by Billtrust, which saw gains of about 6% on the week. As noted in this space earlier in the week, the company said that it partnered with Procede Software, a heavy-duty truck and commercial vehicle dealer management system (DMS) and solutions provider, to expedite payments, boost revenue and increase profits.
Read also: Billtrust Partnership With Procede Software Expedites Payments for Truckers
None of those gains were enough to offset the declines that came in the wake of other companies’ earnings. Marqeta, for example, sank 4.7% on Thursday (March 10), as broader markets slipped. The firm’s earnings report after hours the close of business on March 9 showed 76% gains in total processing volume. Management said on the call that buy now, pay later (BNPL) represented well in excess of 10% of that volume — and is forecasts 40% growth in total processing volume in the year ahead.
Read more: Consumer Enthusiasm for Cards and BNPL Underpin Marqeta’s 76% TPV Growth
MoneyLion reported results on March 10 that saw the shares sink about 7.5% for the session. The firm said that revenue rose 115% year over year to $55.5 million. Management said on the conference call with analysts that it finished the year with 3.3 million customers, up 129% year over year, $1.1 billion in originations in 2021 up 165% year over year.
Now, the question remains as to why the FinTech IPO tracker should be down double-digit percentages, year to date while the broader indices — namely the Nasdaq and the Standard & Poor’s 500, would be down mid-single-digit percentage points over the same period.
Elusive Operating Income to Blame?
Many of the 43 names on the list are valued not on earnings. They are, instead, likely championed on growth potential — which means the potential to keep putting up double digit or even triple digit percentage point gains on the top line. Investors hope that, eventually, that growth filters down to the operating line.
But now we’re in a period of inflation that has not been seen in decades, where every input becomes more expensive, and thus any positive returns wind up being, eventually, delayed. Becoming cash-flow positive (and thus self-sustaining) as a business is a target, not a near-term certainty — and uncertainty is something that investors, by and large, don’t relish.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More