FinTech IPO Index Surges 10.5% as SoFi Rallies on Loan Demand

Tech stocks roared back to life coming into a new month — and suddenly February looks a lot brighter than the beginning of this year ever did.

The FinTech IPO Index was up 10.5%, marking a five-day rally that has brought the group up more than 35% year to date.

That’s a big bounce coming off 2022, when the index was cut in half, but then again, there’s a long way to go before these IPOs come off of the “busted” list. The vast majority of the nearly three dozen names on our list still trade below their offering price — and almost all of those names are down double digits from their IPO levels.

SoFi reported results that helped the stock gain more than 35% through the past five sessions.  And as we noted, demand for personal loans, direct deposit accounts and “cross-buy” opportunities boosted SoFi Technologies’ results despite macro headwinds. Total deposits at SoFi Bank grew 46% sequentially during the fourth quarter to $7.3 billion.

Management said on the conference call that 88% of SoFi Money deposits — across checking, savings and SoFi Money cash management — came from direct deposit members. Personal loan originations of nearly $2.5 billion in the fourth quarter of 2022 were up nearly $820 million, or 50%, and offset 72% declines and 84% declines in student loans and home lending, respectively.

During the call with analysts, CEO Anthony Noto said that the diversification of revenue streams and the fact that the company obtained a national bank license last year allowed SoFi “to be incredibly flexible in a rapidly changing environment.”

And in a nod to the IPO market (this piece does cover the FinTech IPO market, after all) SoFi may have some plans of its own. Noto said that, for SoFi, another business line that could open up “is if the IPO market opens up, we can underwrite IPOs. … We’re the sole retail distribution channel for the Riviana IPO. … Our members want access to IPOs, and we’re providing Main Street with access to IPOs.”

Taking Steps Amid the Macro Headwinds

Other companies saw shares rally on admission that they’re grappling with macro challenges — but that they’re taking steps to realign and right-size operations.

Upstart Holdings rocketed up 36% after the company said this week that it is laying off 365 employees due to reduced demand for lending. The staff reductions account for about 20% of the firm’s workforce. Upstart also plans to suspend the development of its small business loan product “until macroeconomic conditions improve,” per documents filed with the Securities and Exchange Commission.

nCino said that its SimpleNexus company — which provides a platform for real estate professionals including agents and loan officers — said that FI AmeriCU will implement Nexus Engagement, Nexus Origination and Nexus Closing offerings “to provide a streamlined, mobile-first member experience.” The stock was 17% higher during the week.

Shares in Hippo Insurance gained 23.2%. The company said at the end of the month that it has launched the Hippo Builder Insurance Agency (HBIA). The new agency leverages Hippo’s proprietary technology to allow builders of any size to partner with HBIA and, in the company’s language, “generate a predictable revenue stream.”

In a bit of deal making Marqeta said that it will acquire card management platform Power Finance in a $275 million deal. Marqeta’s stock gained 3.7%. The 2-year-old Power, we reported in the wake of the deal, offers a cloud-native platform that provides companies with credit card management services when they launch new card programs.

Not every name was higher on company-specific news. Lufax Holding, listed in the U.S. and based in Shanghai has filed to list in Hong Kong.  The stock was down 1.2% through the trailing five sessions.