Tough Week for FinTech IPO Index as Rally Fades to 6.1% Loss
It was a tough week for the FinTech IPO index, with last week’s rally fading in the face of some year-end trades and news events. Every company, except OppFi, was down, leading the index to drop a shade over 6% for the week.
Among the biggest movers for the week:
Sezzle: The buy now, pay later (BNPL) platform was down 22.9% for the week following a critical report by Hindenburg Research.
The report alleged that Sezzle engaged in risky lending practices, including using high-interest credit lines to fund loans to subprime borrowers. Hindenburg also raised concerns about the sustainability of Sezzle’s business model, citing what it said was a decline in active merchants and customers, questionable subscription enrollment practices and a spike in consumer complaints.
The allegations have not yet been countered by Sezzle. When the company reported its Q3 earnings in early November, Sezzle’s results and earnings materials indicated that active subscribers for its Premium and Anywhere offerings jumped by 319,000 from last year’s September period to end at 529,000 in the most recent quarter. Active customers, overall, were 3.6% higher than last year to 2.7 million. Repeat usage as a percentage of total orders stood at 95.7%, compared to 93.8% a year ago. And quarterly purchase frequency stood at 5.4x, from 3x last year in the third quarter. Total revenues were 71% higher year on year to $40.8 million.
Huize: After leading the FinTech index last week with a huge gain, it fell back to earth, losing 15.9% as the Asian insurance technology platform that focuses on connecting consumers, insurance carriers and distribution partners through data-driven and AI-powered solutions announced it will expand into Singapore and the Philippines. The company targets mass affluent consumers, offering a comprehensive range of insurance products and services across the entire insurance lifecycle.
Opendoor Technologies: The real estate digital buying platform took a 15% cut this week as several executives sold stock, including CEO Carrie Wheeler. The company recently reported mixed Q3 results, surpassing revenue expectations with $1.4 billion, despite a challenging housing market.
The company announced new executive appointments, including Selim Freiha as CFO and Shrisha Radhakrishna as CTO, along with a workforce reduction and separation of its Mainstay unit to save costs. Said Investing.com: “These strategies are part of Opendoor’s focus on achieving profitability, with Q4 revenue projected between $925 million and $975 million, and a contribution profit of $15 million to $25 million.”
Upstart: The embedded finance consumer lending platform fell 12.7% despite a positive report from analyst firm Needham. According to Yahoo Finance, Needham believes Upstart has executed on its finding strategy, built effective partnerships and reduced its reliance on at-will funding sources. “Needham’s crystal ball sees FY25 growth hitting nearly 28%, powered by an improving macro backdrop and a pipeline,” Yahoo reported.
Nubank: The Brazilian digital bank took a 13.8% hit despite its announcement that it will expand into Southeast Asia by investing $150 million in FinTech Tyme Group. Founded in 2019 in South Africa, Tyme Group operates under a hybrid model that combines a customer-centric digital platform with physical experiences, delivered in partnership with nationwide retailers through digital kiosks and bank ambassadors.
Nubank said in a Monday (Dec. 16) news release announcing the deal: “With the objective of offering an affordable banking solution and maintaining a lower cost structure than traditional banks, Tyme Group has reached more than 15 million customers. The bank specializes in emerging markets populations and, besides South Africa and the Philippines, it has a Global Headquarters in Singapore and a development hub in Vietnam, where it plans to open its next operation.”
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