FinTech IPO Index Slips 2.7%

The FinTech IPO Index faced a 2.7% decline, even as some companies witnessed significant double-digit growth. Despite rumours of potential deals and positive economic data indicating consumer spending resilience, the market struggled to sustain rallies. Federal Reserve Chairman Jerome Powell’s recent statements doused expectations that the Fed would halt its rate hike campaign. The possibility of higher interest rates puts pressure on FinTech platforms and digital disruptors in the FinTech 100, leading to increased capital costs and a potential decline in consumer demand, particularly for lenders.

Katapult shares experienced an impressive surge of 36.5% over the past five sessions, although there was no specific news driving the increase. The Commerce Department’s recent report revealed a 0.3% monthly growth in retail sales, slightly lower than the revised April estimate of 0.4%. However, this surpassed the consensus expectation of a decline in spending for May.

nCino shares soared by 23% during the week due to reports of private equity firms expressing interest in acquiring the company. nCino’s board of directors is reportedly considering forming a special committee to review the proposals and determine the next course of action.

Expensify witnessed a rise of over 16% as it prepared to join the broad-market Russell 3000 Index on June 26, according to Yahoo Finance.

Despite these positive performances, the overall impact was overshadowed by declining stocks. The volatile 9F Group experienced a significant drop of 25%. Upstart shares also fell by 13.6%, relinquishing some of the momentum from the triple-digit rally witnessed in the past month. SoFi shares declined by 12.8%, prompting caution from some Wall Street analysts following a substantial rally.

Piper Sandler analyst Kevin Barker expressed concern over the potential impact of rising interest rates on the FinTech sector, downgrading his rating from overweight to neutral. Affirm shares dipped by over 12% two weeks after the announcement of its inclusion as a payment option at checkout through Amazon Pay. Robinhood stock slipped by 5% following its recent acquisition of X1, signalling the company’s expansion into credit card offerings beyond trading.