FinTech IPO Index Gains 2.4% as Upstart Soars on Consumer Loan Sale

The FinTech IPO gathered 2.4% in a week that saw the last few remnants of earnings reports trickle in.

And of course, beyond the revenues and various customer metrics detailed in those quarterly reports, there were firms that had non-earnings headlines of their own.

Upstart Stages Significant Rally

Upstart saw its shares soar 48% through the past five sessions. As announced Monday, Castlelake, an alternative investment manager, along with co-investor and minority partner Eltura Capital Management, struck a pact to buy as much as $4 billion worth of consumer loans from Upstart.

“Through the transaction, Castlelake will leverage its experience underwriting consumer credit and small business loans to provide Upstart with the ability to upsize its business,” per the companies’ announcement.

Shares in XP were up 5.7%. The company posted first quarter earnings that showed a 9% boost in client assets to 954 billion reais in Brazil. The company’s filings detail that active clients were up 13% year over year (YoY) to 3.9 million. Retirement plans’ client assets were 62 billion reais, gaining 23%.

Riskified’s latest earnings report — where gross merchandise value was up 20% to $27.2 billion in the most recent quarter, and revenues were up 17% to $68.9 million, helped boost shares by 18%. Management noted in its earnings materials that during the most recent quarter, Riskified diversified the platform with the onboarding of new merchants across a number of verticals. Eight of the top 10 new merchants won during the first quarter represented categories outside of Tickets and Travel.

Some Declines Amid Earnings Reports

Robinhood’s stock sank roughly 11%. In our earnings coverage this past week, balance sheet losses jumped nearly a third (30%) to $511 million, much of that due to a hit from a one-time $485 million share-based compensation expense, compared to revenues of $441 million, which was up 16% for the quarter.

Robinhood’s monthly active users (MAU) increased by around 400,000 to 11.8 million for the most recent quarter, nearly half of the platform’s 21.3 million MAU count during retail investing’s peak in the second quarter of 2021.

The trading app’s first quarter 2023 MAU of 11.8 million represents more than a quarterly (26%) YoY decline in activity.

The platform’s net deposits annualized growth rate was 29% for the quarter, and 18% over the past year.

Shares in Futu Holdings lost nearly 10% through the past five sessions.

As reported this past week by The Wall Street Journal, Futu is one of two brokerages listed on U.S. exchanges (the other is Up FinTech Holding) that are removing trading platforms from app stores in China starting this week.

The changes — equating to a reduction in services in China — are ones that are being made to comply with new requirements mandated by the the China Securities Regulatory Commission’s requirements governing cross-border transactions, specifically where clients on the mainland had been making cross-border trades. Futu, for its part, has said that that it would remove its Futubull app.

The company’s apps are used by Chinese clients to trade stocks and other holdings on international exchanges.