A Lot Of Recently Public Fintechs Have Seen Share Prices Plunge

Venture-backed fintech companies carried out many of the largest market debuts of the past year. But while most did well at first, aftermarket performance has been choppy.

Among recently public fintechs, more than a dozen fall into the category of “truly terrible performers”—with shares trading far below their initial offer price, according to an analysis of Crunchbase data.

Several others have fallen less steeply but are still down from their initial prices.

Meanwhile, even those posting gains since their market debuts are mostly trading well below their former highs. This includes prominent companies like Coinbase and Affirm.

The mixed-bag returns follow an exceptional year for both fintech startup investment and exits. For 2021, financial services was the leading sector for venture investment, with $134 billion invested, marking a whopping 177 percent year-over-year growth. Public offerings in the space also rose, including at least 20 debuts on U.S. markets, which are listed here.

Since continued strength in fintech startup funding will likely require some public market enthusiasm for the space, we thought it’d be useful to take a look at how shares on major U.S. exchanges are performing.

Laggards first

First, we’ll look at the worst performers. This isn’t schadenfreude so much as a reflection of the fact that there are a lot of them.

To start, we compiled a list of companies that went public in the past five calendar quarters and had shares trading 30 percent or more below their initial offer price last week. We list them below:

The list is heavily populated by companies that took the SPAC route to market in lieu of the traditional IPO roadshow. As we’ve noted previously, a lot of funded companies that completed SPAC mergers have been exceptionally poor performers. This includes some fintech SPAC deals, including MoneyLion, a mobile banking provider, and Bakkt, a platform for managing crypto and other digital assets.

Big name offerings that took the traditional IPO route, however, also rank among those that have fared poorly. For instance:

• Robinhood, the zero-fee stock and crypto trading platform, has presided over a particularly steep fall in its share price. The company priced its IPO shares at $38 each in July; they were recently trading around $15.
• Marqeta, a heavily venture-funded card issuing and transaction processing platform, priced shares for its June IPO at $27 each. The Oakland-based company was recently trading around $13 a share.

Some better and not so bad ones

Some fintechs have fared better. Examples include:

• Shares of Affirm, the buy now, pay later financing provider, are up about 50 percent from the company’s initial offering price a year ago, with a recent market cap around $18 billion. That’s still a strong track record, even though they have shed over half their value from peaks hit in the fall.
• SoFi, the online lending platform, is up a bit from the initial trading price after the company completed its SPAC merger in June. With a recent market cap around $11 billion, it’s still fairly highly valued, even though shares are far off their peak.
• Coinbase, which opted to go public through a direct listing, has seen much of the early exuberance around its April market debut fade, but still maintains a market cap around $58 billion. The company set a reference price of $250 per share for its debut, but saw shares actually open at around $381 each. Recently the stock was hovering around $222 per share.

A really good one

And then, there’s Upstart.

Upstart, a Silicon Valley-headquartered online loan provider, has seen shares more than quintuple in value since the company went public in December 2020, giving it a recent market value of more than $9 billion. It’s likely helpful that Upstart, in contrast to most of its recently public fintech peers, is profitable.

Still a hot space for VCs

It seems odd to some degree that fintech continues to be the reddest of red-hot sectors for venture investment amid a period when so many public market entrants are struggling.

Perhaps it helps that even with shares down, many of these companies still have high market caps, including Robinhood and Marqeta, recently valued around $12 billion and $7 billion, respectively.

Still, public investors are signaling that they prefer to be choosy when it comes to fintech, favoring a few names and shunning others. Perhaps that mentality will filter down to VCs as well.

Illustration: Li-Anne Dias

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