In a Year Of Busted IPOs, Fintech Index Is On A Downward Slide
The Fintech stock and IPO Index were nearly destroyed last year. One number explains it all: The Index suffered a loss of more than 51%, making it dreadful. That was much worse than the 33% drop in the NASDAQ, which serves as a broad indicator of tech stocks, and about in line with the 52% decline in the Global X FinTech ETF fall recorded by The Wall Street Journal.
Platform systems may have guaranteed disruption, but the last year has demonstrated how macro factors can thwart those promises and reveal that profits will remain elusive. The threat of increasing rates and inflation has two effects: Homebuyers, consumers, and house sellers are forced to scale back on their operations, which slows top-line development. Eventually, the cost of operation increases. The race is on to find income elsewhere for the investors, who provide the funds directly to support these models.
Additionally, more than just American businesses or businesses serving consumers are affected. Triterras, which lost over 48% of its value the week before, is still suffering due to firm disclosures that trade credit coverage for businesses has suffered due to the challenging macroeconomic environment. Cryptocurrency meltdowns also affected Robinhood, most prominently due to FTX’s ongoing repercussions. According to a story published last week, FTX co-founder Gary Wang and Sam Bankman-Fried claimed in court that they obtained $546 million from Alameda Research to fund Emergent Fidelity Technologies.
The first day of trading in 2023 was not very promising. Inflation is on the rise and consumer spending is expected to be erratic.
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