Opendoor’s 29% Plunge Leads FinTech IPO Index Lower

Macro concerns and interest rates tipped several FinTech IPO names into double digit declines.

The FinTech IPO Index slipped by 4.4% through the past five trading sessions and now stands 48.6% lower year to date. Many names are down more than 90% from their IPOs, including Opendoor, OneConnect and others.

And though earnings season is but a whisper in Wall Street memory, some issues linger: For companies that have been reliant on high demand when interest rates are low, when rates jump, the business suffers. Real estate and credit verticals have been specifically at risk here.

Macro Outlook is Still Uncertain

The fact remains that the macro outlook is still uncertain. Last week, the Fed signaled that interest rate hikes would likely be tempered into next year. This week, jobless claims edged up, indicating that the economy might be slowing. The jury’s out as to whether we’ll see a soft landing or not.

OpenDoor Technologies lost 29%, leading decliners in the Index. The slide comes in the wake of the news that Eric Wu, co-founder of Opendoor,  will be stepping down as CEO (though will be remaining with the company). Wu is being replaced by CFO Carrie Wheeler. Opendoor had been realizing losses on transactions and has been grappling with challenges bedeviling the real estate market amid soaring mortgage rates. In November, the company said it would lay off 18% of its staff, or 550 individuals.

Triterras sank 27%, continuing a losing streak that had been set in place since reporting its six-month results at the end of last month. In those results, the company pointed to an environment that has been “clearly very challenging,” adding that “although global trade flows have stabilized, many of our customers, micro-, small- and medium-enterprise traders continue to suffer from reduced availability of, and increased premium rates” for trade credit insurance and reduced liquidity.

MoneyLion gave up 19.3% through the past five sessions. The company’s materials from its investor day on Thursday (Dec. 8) note a medium term target 35-50% CAGR for its top line (we note that past years had more than 90% and have been triple digit percentage points as recently as 2021).

Lufax was up 30.5%, as Chinese names surged in the wake of news that the government had relaxed a number of COVID-related lockdown and testing restrictions. Similarly, Futu Holdings was up 11.4%, also given an ostensible boost by the same news.

Three weeks left, and there’s not much room to save this Index from finishing up 2022 as a year that is going down in history — albeit for a slew of reasons — and losses — that investors would rather forget.