Fintech valuations plummet

Fintech firms have shed almost half a trillion dollars this year compared to their peak valuation, according to tech market consultancy CB Insights.

Despite being expected to soar post-pandemic, macro-economic events have led to a downturn among fintech companies, according to new data.

The data reveals that the cumulative market capitalisation for fintechs has plummeted by $156bn (£130bn) this year. If listed fintechs were to have their current stock valued in comparison to the sector’s all-time high, around $460bn would have been wiped out.

Read more: Covid-19 contributes to contraction in fintech funding 

The massive increase in use of digital services during the pandemic saw a record number of initial public offerings (IPOs) in the sector in 2020, particularly in the US where 30 fintechs have listed since then, according to CB Insights.

However, the surge in IPOs also invited greater scrutiny of profits and business practices in the sector, deterring some investors.

Read more: Investors are seeking more mature fintech firms

The Financial Times (FT) has reported a 50 per cent drop in the share price of listed fintechs this year, while in comparison the Nasdaq Composite has fallen by 29 per cent over the same period.

Mizuho analyst Dan Dolev told the FT that fintechs and digital payments firms, benefited from the pandemic early on because people were stuck at home.

“Now they are overcorrecting to the downside ahead of other sectors too,” he said. However, he said he expects many fintechs to rebound in the second half of the year.

Privately funded payments fintechs are also feeling the pinch. Stripe slashed its valuation by 28 per cent at the end of last week.

Read more: New review into fintech funding launches