Lending Platforms Plunge as Tech Rout Sends FinTech IPO Index Down 4.9%

It wasn’t just crypto that had investors running for the exits.

And it wasn’t just talk of more rate hikes from the Fed that had investors hitting the sell button.

This week’s downdraft for the FinTech IPO Index was a confluence of above, yes, but the general malaise that hit the markets left no name of ours unscathed across a five-day losing streak that left the FinTech IPO Index 4.9% lower.

And this time around, it was the platforms that led the plunge, though the plunge was widespread.

Earnings in Focus

Doma Holdings was 22% lower through the week, having reported earnings that showed that in the fourth quarter total revenues of $96 million were down 11% versus Q3 2022. Retained premiums and fees of $35 million were down 17% versus Q3 2022 amid a difficult housing market. Purchase closed orders down 26% versus Q3 2022.

Max Simkoff, CEO, said on the conference call with analysts, “Looking ahead to the first half of 2023, while many in our industry have started to point to potential signs of a recovery, we remain cautious and anticipate that a tepid housing market will continue to put pressure on our ability to generate retained premiums and fees.”

Katapult lost just under 20% through the same time frame, reporting in its own results that in the December quarter, gross originations of $59.8 million increased by $0.9 million, or 1.5% year-over-year, the first positive inflection since the third quarter of 2021. December 2022 gross originations increased by mid-teen percentage points year-over-year. Total revenue of $48.8 million decreased by $24.5 million, or 33.4% compared to the prior year period

Oportun said this week it has unveiled a “new brand identity” through which it is merging  Oportun and Digit into a single brand and app. The announcement comes ahead of the company’s earnings release, which is slated for the beginning of next week. The stock gave up  a bit more than 16%.

Open Lending lost 1.9%. The company has announced a partnership with Crescent Bank, offering auto loans to consumers across 32 U.S. states.

Some Positive Performance

There were a few outliers, however. Nuvei shares surged 21% through the past five sessions.

The company said that during the fourth quarter of 2022, total volume increased 28% to $40.3 billion from $31.5 billion; and eCommerce represented 91% of total volume. And with those tailwinds in place, the company reported that revenues were up 4% to $220.3 million in the most recent period. There were at least some headwinds in the mix, as Nuvei noted in its filing that revenues from digital assets and cryptocurrencies slipped by 58% year on year to $19 million.

Elsewhere, and in the same week, that earnings were reported, Nuvei said that businesses operating in Australia can now access its full suite of payments solutions including acquiring, processing, alternative payment methods and risk management.

Paysafe gained nearly 9%, and reported earnings this week. Total payments volume was $33.1 billion, up 5%. Revenues of $383.6 million were up 8% on a constant currency basis. Digital wallets revenue was up 7% in constant currency, and average transactions per active user, the company said, stood at 25.9, up 34% year on year.

The deepening gloom has sent our index lower for the week, though the overall performance is still up 12% for the year. But as noted here, the average name is trading at roughly half of its initial offer price.