Data Snacks, Member Exclusive

Data Snack: US fintech lenders down 30% on average in Q1 2022

  • Macroeconomic trends loom over the fintech sector and pressure public market stocks - most fintech lenders are down 30% or more in the first three months of 2022.
  • This could be a reaction against higher interest rates, which can grow the risk of defaults - driving investors to reevaluate fintech valuations, especially those with aggressive growth strategies.
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Data Snack: US fintech lenders down 30% on average in Q1 2022

US public-listed fintech lenders experienced a slump in the first quarter of this year, with share prices dropping by around 30% on a simple average basis. 

Looking at Tearsheet’s cohort of fintechs in the lending industry – Affirm, Dave, Lending Club, MoneyLion, PayPal, Oportun, Square and Upstart – the stock performance on the public markets seem to indicate a significant devaluation compared to the end of 2021. 

This trend is not isolated to the lending sector – fintech stocks have witnessed some serious valuation cuts over the past year as they face a bear market compared to a more generous 2021. 

One of the driving factors behind this has been rising interest rates, as the Fed seeks to react to inflationary pressures. Higher interest rates could grow the risk of rising default rates, which might have spooked investors. Moreover, as capital becomes more expensive, so does the funding for these fintechs – funding which many are relying on to pursue their aggressive growth strategies. 

 

 


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