Shulou(Shulou.com)11/24 Report--

On the morning of March 9, Beijing time, it was reported that the US IPO (initial public offering) market had suffered a "freeze" before, but now there are signs of "melting ice". However, for a class of Internet companies seeking to go public, it will be very difficult for them to regain the "favor" of investors-this is the once-popular financial technology industry.

Over the past year, US activity on IPO has almost ground to a halt, most importantly because the Fed has adopted a very aggressive policy of raising interest rates, which is equivalent to withdrawing money from the IPO market.

Now, there is cautious optimism in the IPO market, and some startups with good fundamentals and stable revenue are starting to go public again. Statistics show that 24 companies have gone public in the United States since the beginning of this year, and about 140 companies have submitted listing documents.

As investor confidence recovers, more companies will restart their listing plans, but fintech companies are likely to lose this time around in the IPO competition, mainly because the industry faces problems such as burning money too fast, losing money more and more, and the stock prices of listed fintech companies are performing too badly.

Matthew Kennedy, chief strategist at Renaissance Capital, an IPO research firm, said the recovery in the US IPO market was still in its early stages and that although the listing had resumed, they expected fintech companies to be "the last people to join the party".

Kennedy said it would not be surprising if fintech companies did become onlookers in the IPO market in 2023.

In the financial technology industry, the most promising startups include Internet finance duo Chime and Stripe, as well as Acorns, an investment vehicle, and Klarna, an installment payment service.

Industry ups and downs during the global COVID-19 epidemic, the popularity of financial technology mobile phone software increased rapidly. At that time, consumers were trapped at home and the United States was in an interest rate environment of "close to zero." this makes it easy for the financial technology platform to provide fast loans to consumers, and the business is booming.

In order to cater to the younger generation of consumers, mobile payment giants including PayPal and Block have launched buy-and-pay services.

But times have changed, and interest rates in the United States have climbed to their highest level since the financial crisis, and investors have been alarmed by financial platforms that have too many "subprime" repayment risks. It is difficult for these companies to prove their high valuations in the listing process.

A number of IPO experts in the United States said that in the financial technology market, the situation is more complicated. Some companies that have maintained high growth and put more emphasis on expanding market share may not be quite in line with the current focus on profitability in the capital markets.

Experts say there are also some fintech companies that have sufficient business size and cash flow and may decide whether to go public or continue to wait and see the capital markets according to their own circumstances.

According to the statistics of professional companies, there was a small peak of IPO in the US capital market in 2021, when a total of 20 financial technology companies went public, raising a total of US $10.93 billion. In 2022, however, things took a turn for the worse, with only one fintech company going public, raising just $144 million.

David David Ethridge, head of the US IPO business at PricewaterhouseCoopers, said that the IPO market for fintech companies was not closed, but investors paid more attention to reasonable valuations and profitability.

Mr Asledge says that if fintech companies want to go public, they must rely on practical actions to win investor confidence, including cutting operating costs and being more transparent about how to reduce the "speed of burning money".

It is reported that financial technology companies that have been listed in the past have failed to meet investors' expectations, they have gradually exposed operating losses and share prices have suffered an avalanche.

Coinbase, an American digital currency exchange, was listed on Nasdaq in April 2021, when it was valued at $86 billion. Today, its capital market capitalization has plummeted to just $15 billion.

Robinhood, an American zero-commission stock trading platform, and Affirm, a holding company known as the "American version of Huabai", have each lost $20 billion in market value since they went public.

Kennedy, an executive at Renaissance Capital, said that in the past, some high-growth financial technology companies were valued as technology companies, valued at several times the size of revenue. However, as the heat of the industry cools, today investors are more likely to value them according to the standards of financial companies, and profit figures are more important.

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