FinTech IPO Index Down 3.7% as Tech Stocks Face Continued Carnage

The rout that tech stocks faced on Thursday captures all the pressures faced by the FinTech IPO names … and captured them in a nutshell.

Economic data fueled fears of continued rate hikes, as U.S. GDP rose 3.2% year over year in the third quarter. That report beat estimates of 2.9%, and as inflation remains at lofty levels, the promise of rate hikes by the Federal Reserve well into 2023 seems assured.

The specter of continued rate hikes fuels fears of headwinds for the platforms and the digital-only upstarts that promise to “make over” verticals such as real estate and lending and trade that are, well, rate sensitive.

One Week Left

To that, the FinTech IPO comes into the last week of the year down 3.7% through the past five sessions — and stands more than 52% lower year to date. As for those rate sensitive names?  Trade finance firm Triterras was down 28% through the week, and Opendoor, focused on residential real estate, followed close behind with a 26% loss. Upstart gave up 16% through the same timeframe, as the model of originating personal loans and selling them to investors, can face some headwinds as those investors demand higher yield in a higher-rate environment.

OppFi lost 7.7% in a week that saw the FinTech, focused on consumer credit, close a $150 million credit facility with an affiliate of Castlelake as lender, per company reports. The company said that the facility will enable OppFi to fund receivables growth.

Nuvei slid about 8%. As noted in this space at the end of last week, Nuvei, based in Canada, and Holland Casino have extended their partnership to enable instant payouts to Dutch players. The payouts are enabled by  integrating SEPA Instant Credit Transfer into its cashier, and funds can be instantly accessed from user accounts.

Futu lost just under 7%, having proposed a dual listing on the Hong Kong Exchange of its Class A shares.

And in a sign of what might lie ahead for FinTechs — in an exit strategy that may become a consideration for beleaguered FinTech names — the acquisition of Billtrust by EQT Private Equity has been completed. The go-private transaction means that the B2B order-to-cash software provider has ceased trading. The all-cash transaction values Billtrust’s equity at about $1.7 billion and comes a year after the company went public and began trading on Nasdaq.

The losses in the names above swamped the few stragglers that managed to eke out gains though the past five trading days.

Katapult was up 1%, The company, which focuses on omnichannel retail, said in a release that it has partnered with iBUYPOWER, which manufactures high-performance custom gaming PCs on flexible payment options.

The most notable gainer was dLocal, which surged 14%.  The company responded this week to allegations made in a report by short seller Muddy Waters Capital last month and also said it has instituted a share buyback program for up to $100 million of the company’s stock.

“We maintain separate bank accounts for merchant cash and our own cash. We have not used merchants’ cash to make loans to our senior leadership or to pay dividends to our shareholders,” the company said. dLocal also said that  it has been consistent and transparent about how it calculates and reports its total payment volume and comparisons by cohort.