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​Hi everyone - Charley here!

Usually my posts are behind the paywall, but I convinced Julie to publish this one for everyone. If you wanna get all of my newsletters though, definitely sign up here. We can chat in our Slack Community that way too :)

Anyways, I wanted to do a quick follow up from some of the previous S-1 breakdowns I’ve done of companies like Marqeta and Blend (previous write ups in the links) to see where they landed, (I added in Robinhood today for fun too). Fintech investing continues to be red hot, and with acquisitions like Square’s massive $29B bet on AfterPay, exit windows and multiples continue to be just as hot!

Marqeta

Marqeta had a pretty good opening IPO day. Its stock opened at $32.50 per share vs the IPO price of $26 per share, and eventually landed up 13% at $30.52 per share (market cap of just over $16B). This was a significant win for all investors that managed to get in prior to Marqeta hitting the public markets, with the most recent private market valuation of $4.3B just last year.

Marqeta had its first earnings call as a public company two weeks ago, and while top line numbers were above expectations, it ended up reporting a net loss with increases in gross profit offset by increases in employee related costs. Total payment volumes had increased dramatically to $26.5B, up from $15.1B a year prior and thus net revenue also rose accordingly to $122.3M vs industry expectations of $105.3M. This is largely thanks to BNPL partners such as Affirm and Afterpay dramatically increasing their volume (BNPL as a category up 350% vs the year prior). However, the quarter resulted in a $68.6M net loss vs $7.1M last year (net loss of $0.29 per share vs an industry expected net loss -$0.07 per share). As a result, the market reacted a bit mutedly to the earnings, with the stock now down ~14% and hovering at $25 a share today (so a little under $14B in market cap).

Blend

Blend also raised at the top of their marketed range for their IPO opening with an opening price of $18 per share which gave it a market cap of close to $4B with a bit of an opening surge in price of 16%. However, the next day fell $15 to close flat to the IPO price (one could argue it was quite well priced according to market demand, aka cue Bill Gurley, but anywho…). Shares have been going down following Blend’s earnings report last week, which showed a loss of $39.5M in the second quarter vs a loss of $20.8M last year. Revenue has increased 46% YoY to $32.1M and the company expects to be in the range of $226M-$232M in 2021 revenue, but investors seemed to be a bit spooked by the increase in losses.

Marqeta and Blend are both still in the wait and see categories in my opinion. We’ll need to get a few more quarters to really get a sense of what the actual long term growth rate is.

Robinhood

As we covered during IPO opening day, Robinhood’s Wall Street debut was quite muted, falling 8% from its opening price (which was the bottom of the price range) valuing the company at around $32B. Nevertheless, this was still a significant win for earlier investors, with the most recent private round earlier this year at $12B. But, as you might have guessed, it was only a matter of time before Robinhood got a bit of the WSB treatment and surged in price, hitting more than $70 a share at one point in early August and currently settling in at around $49 a share ($41B market cap). On its first earnings report, Robinhood reported that it doubled its second quarter revenue to $565M thanks in large part to a massive surge in crypto trading. At the same time, it also warned of a potential slowdown in trading hitting revenues for Q3. Crypto revenue jumped from 17% of revenue in Q1 to 51% of revenue in Q2. So in a weird way, we all have dogecoin to thank here (which accounted for 34% of cryptocurrency revenue in Q1). The biggest question here is what happens to the future of retail trading, and if Robinhood’s best quarters are behind it if trading rates fall back to pre-pandemic norms.

So far, it seems as though the market is still awarding high growth and high visibility fintech companies with high multiples, regardless of revenue concentration, margin profile, or even customer concentration risk! Time will tell as to whether the market will continue to support, but there’s never been a better time than now to exit in the public markets if you’re a fintech company that’s growing. :)

Charley Ma is currently GM of Fintech at Alloy, where he focuses on the go-to-market strategy for the fintech vertical. Prior to Alloy, he was head of growth at Ramp. Previously, he was the first growth hire at Plaid, where he started its fintech sales team and opened the NYC office prior to the announced exit to Visa for $5.3B. Charley is also an active angel investor in fintech + developer infrastructure and enjoys a good tweet.