Affirm, Upstart Help FinTech IPO Index Beat Sagging Retailers, Markets

Not bad.

Relatively speaking, that is.

In a week where sentiment in the stock market has been driven by retailers — Target, Lowe’s, et al — and where we saw mid-single-digit percentage declines in the overall indices, the FinTech IPO group held up pretty well.

In fact, using Wednesday as a key point of comparison, the average name in our more than three dozen-member pantheon was down “only” about 1.6%.

While we would not go so far as to say there has been a rotation to recently-IPO’ed tech firms as bastions of safety, in at least some cases through the past week these names have rallied double-digit percentage points — with some stratospheric standouts.

Still Down for the Year

And yet, despite an 18% surge for the IPO group, year to date we are still down 40%.  That gives us pause to wonder just how long a rally — especially if it’s a relief rally — might hold out.

As to those tailwinds: Upstart soared about 72% stretching back into the end of last week. Affirm gained 67%.

For Affirm’s performance, there’s no real mystery here: Recent earnings have shown that buy-now, pay-later (BNPL) and other lending products still have been seeing demand. As noted in this space, Affirm’s core metrics, Chief Financial Officer Michael Linford pointed to the exponential increase in merchants added over the past year, which rose to 207,000 from just 12,000 in 2021. At the same time, Linford said active customers more than doubled to 12.7 million, while gross merchandise value (GMV) advanced 73% to $3.9 billion.

Read Also: Affirm Surprises Market With Merchant and Customer Growth, Extended Shopify Pact

Upstart’s upswing may indeed be a relief bounce, given the fact that the name was cut roughly in half on the heels of earnings. Results and commentary were less sanguine on the state of credit and some macro commentary from management. With a nod to the lending activity, Upstart’s CEO Dave Girourd said that “a whole bunch of people that would have been approved are no longer approved.”

The total volume of loans in the most recent quarter was 465,537; at the end of the fourth quarter, it was 495,205. Supplemental materials released by the company in tandem with earnings show that the loan conversion rates were 21.4%, down from 24.4% at the end of last year.

And of course not all the news this past week has been earnings-focused.

For example, Billtrust announced this past week that PepsiCo deployed its automated Credit Application solution to support the distribution of a new Mountain Dew-branded alcoholic beverage. Those joint efforts will support the onboarding of new distribution partners.

And separately, Nuvei Corp. said that it has partnered with Hard Rock Digital to provide payments services for its Hard Rock Sportsbook mobile app. In terms of mechanics, players in Arizona, Virginia and states that, in the future, embrace the Hard Rock Sportsbook platform, will be able to instantly deposit funds to their gaming wallets from their bank accounts.

For the FinTech IPO, this past week might have been termed the pause that refreshes. For a moment, perhaps a brief moment, the group managed to outshine its broader benchmarks.