Flailing Fintechs 💸

A recent analysis by the Financial Times reveals that recently-listed fintech companies have dropped an average of 50% this year, compared to a 29% drop in the Nasdaq Composite. This result is a complete reversal of last year’s earnings during the second quarter of 2021, which saw annual revenue growth of 1000%. All said, about $460BN has disappeared from fintech company valuations at their peaks.

Bad attention
When the SEC is looking into the legality of your revenue stream, confidence plummets. No one knows about this idea more acutely than Robinhood. The company's no-commission trading platform is getting the side-eye from the SEC about whether passing on the trading costs to the retail brokers is a fair practice. The Securities and Exchange Commission will propose new rules in the fall, after a $70MM slap on the wrist for outages related to the Gamestop fiasco of 2020. Webull is another app brokerage closely watching for new regulations in the industry.

The BNPL Struggle
Rising interest rates have put the business models of buy-now, pay-later companies at risk. BNPL has risen in popularity for primarily younger consumers who enjoy the zero interest payment plans for purchases in the here and now. Klarna, the Swedish BNPL player, has seen its private valuation plummet from an all-time high of $45.6BN down to a piddly $6.7BN in its latest funding round. 

On the flip side of a “what goes up, must come down” storyline, investors are still confident in fintech. Fairplay, an algorithmic decision-maker for financial institutions, just raised a $10MM Round A. Pebble Finance has built a customizable ETF solution for amateur investors. It raised a $5MM seed round last week.

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