The FinTech IPO Index’s 3.4% gains were outpaced this week by outsized momentum in names like SoFi, while earnings reports in other holdings continued to impact trading.
Shares in SoFi soared 28.1.%. As has been widely reported, as part of the agreement on Capitol Hill suspending the debt ceiling — which passed the House and moved to the Senate — borrowers who took out student loans will need to resume payment after a more than three-year moratorium.
As noted in this space, in the company’s latest quarter, student loan originations were down by 47%. Yahoo Finance pointed out this week that the un-freezing of the payments might spur borrowers to seek refinancing on their loans, which, in the words of research from Wedbush Securities analysts, would be an “incremental positive” for the company.
Shares in Huize rose 20% through the past five sessions. The company’s latest earnings results show gross written premiums facilitated on Huize’s platform increased by 44.4% year-over-year and 33.4% sequentially to RMB1,932.7 million. First-year premiums facilitated increased by 153.9% year-over-year and 58.6% sequentially to RMB660.7 million. Operating revenues, the company said, were essentially flat at RMB298.9 million (the equivalent of $43.5 million)
Upstart gained 12%, and it should be noted that the prospect of at least a near-term pause in interest rate hikes has cheered investors on the prospects of lending platforms. The macro tailwind might be enough to spur a tailwind for car loan refinancing and personal loans — and may also improve the economics on those loans.
Beyond the lending sectors, a pause by the Fed might also spur continued consumer spending, which of course, would lift transaction counts, payment processing and thus the fortunes of many of the FinTechs that comprise our index.
dLocal’s stock gave up 21.7%. The company, according to reports in the Argentine news outfit Infobae, is being investigated by that country’s government that there had been “improper maneuvers” and transfers of as much as $400 million in funds that allegedly might constitute fraud, per reports via Reuters.
In its own response, dLocal said the Infobae report made “misleading allegations” and said that “our activities are subject to government regulations specific to each currency being exchanged. In Argentina, expatriation of funds are conducted through regulated parties that follow the Central Bank of Argentina rules, containing detailed information at a payment transaction level. Funds expatriated from Argentina are settled to global merchants, net of taxes.” dLocal also said, “we continue to process payments normally in Argentina. We have been operating in the country since 2016 and have a solid local presence with over 150 employees across numerous offices.”
Shares in OneConnect sank more than 12%, continuing a downtrend that comes on the heels of earnings earlier in May that detailed revenues declining in the most recent quarter by 9.1% year over year to RMB 925.9 million. The company noted in its earnings filings with the Securities and Exchange Commission that the revenue slide came amid a decline in transaction-based and support revenues.