FinTech IPOs Take a Beating as Investor Confidence Wanes
IPOs in the financial technology industry are facing a steep decline. There is a reason to worry regarding the performance of different FinTech IPOs in light of the global epidemic and the recent drop in the Nasdaq. Only 3 of the 46 tracked FinTech companies are trading at a premium to their share price. As a result, only 6.5 percent of the firms have been profitable, while the rest are losing money and are considered to be busted IPOs. The post-IPO achievement rate is down over 53%, even after accounting for the winners.
Those that made headlines in 2020 IPO news are reduced beyond 59% on average, and those announced in 2021 have decreased by 64%. However, returns have averaged 7.7 percent for 2019 debuting companies. Success can be traced to the ever-growing need for backend management, business automation, and online capital planning, respectively. As a result of back-office inefficiencies, 28% of small and medium-sized businesses say they need better cash flow visibility, significantly increasing the need for accounts payable solutions.
MoneyLion (down 91%) and Robinhood (down 71%) are only two examples of the diverse lineup of deteriorating difficulties. SoFi’s tech stock is down 71 percent, while Affirm is down over 86% since 2021. Both of these stocks were once considered to be examples of the longevity of platforms. There is clear evidence of the challenges posed by tightening institutional financing and the resulting concerns about user spending.