Opendoor’s 29% Plunge Sinks FinTech IPO Index
Macro concerns and interest rates tipped several FinTech IPO names to double-digit declines.
The FinTech IPO index fell 4.4% over the past five trading sessions and is now down 48.6% year-to-date. Many names are down more than 90% from their IPOs, including Opendoor, OneConnect and others.
And even if earnings season is just a whisper in Wall Street’s memory, some problems remain: For companies that have relied on high demand when interest rates are low, when interest rates jump, business is suffering. Property and credit verticals have been particularly exposed here.
Macro Outlook is still uncertain
The fact is that the macro outlook remains uncertain. Last week, the Fed signaled that rate hikes were likely to be muted into next year. This week, the number of unemployed increased, which suggests that the economy may be slowing. The jury is out on whether we will see a soft landing or not.
OpenDoor Technologies lost 29%, leading the index to decline. The slide comes in the wake of news that Eric Wu, co-founder of Opendoor, will step down as CEO (but will remain with the company). Wu will be replaced by CFO Carrie Wheeler. Opendoor had realized losses on transactions and has struggled with challenges that confused the real estate market amid soaring mortgage interest rates. In November, the company said it would lay off 18% of its employees, or 550 people.
Triterras sank 27%, continuing a losing streak that had been put in place since it reported six-month results late last month. In these results, the company pointed to an environment that has been “clearly very challenging”, adding that “although global trade flows have stabilized, many of our customers, micro, small and medium-sized enterprises, continue to suffer from reduced availability of , and increased premium rates” for trade credit insurance and reduced liquidity.
MoneyLion gave up 19.3% through the last five sessions. The company’s investor day material on Thursday (Dec. 8) shows a mid-term target of 35-50% CAGR for the top line (we note that recent years had more than 90% and have been triple-digit percentage points as recently as 2021 ).
Lufax rose 30.5%, as Chinese names rallied on news that the government had eased a number of COVID-related shutdowns and testing restrictions. Similarly, Futu Holdings was up 11.4%, also given an apparent boost by the same news.
Three weeks to go and there isn’t much room to save this index from finishing 2022 as a year that goes down in history — albeit for a variety of reasons — and losses — that investors would rather forget.
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