Bittersweet results from Coinbase 🤷♂️; N26 to IPO this year? 🤔; Shares nets $40M to make investing social 💸
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Good day Everyone,
And happy Saturday! This week was super hot and might be the hottest week of the year in FinTech. Therefore, without further ado, let’s dive into the three stories that were supermassive this week. You can uncover other stories, keep the FinTech pulse daily and get at least x5 more by becoming a subscriber. Join the community here:
And here’s a mix of 3 hot & fresh FinTech stories from this week:
Bittersweet results from Coinbase 🤷♂️
Earnings call 📞 Crypto exchange Coinbase reported fourth-quarter earnings that beat analyst estimates. Shares bounced around after the report. They were down about 5% in extended trading by the end of executives’ call with analysts.
Key numbers 📊 Here are the key numbers:
Earnings per share (EPS): $3.32, versus $1.85 expected, according to a Refinitiv survey of analysts
Revenue: $2.5 billion, versus $1.94 billion expected, according to Refinitiv.
MTUs jumped to 11.4 million in the prior quarter, up from 7.4 million in the third quarter; Coinbase saw a decline in MTUs between the second and third quarters.
It also reported net income doubled to $840 million in the fourth quarter compared with the prior period, or several times the year-earlier quarter, when it reported $177 million.
✈️ THE TAKEAWAY
Investors are buying the story 🤷♂️ Despite record-breaking quarter, the price of COIN shares fell. The key reason for that is because the crypto exchange noted it faces headwinds, including macroeconomic, geopolitical, and crypto-specific issues. Investors don’t love a non-growth story, and Coinbase did not promise one. Yet, some investors are still bullish, and you probably should be too. Coinbase has an opportunity to diversify revenue in staking, NFTs, and derivatives products, not to mention a potentially massive surge in new customers after their blockbuster Super Bowl ad. So don’t panic-sell $COIN just yet.
N26 to IPO this year? 🤔
Not exactly… but hear this out 🗞 German FinTech giant N26 - last valued at $9B - will be structurally ready for an IPO by the end of the year and could list as early as 2024.
More on this 👉 CEO Maximilian Tayenthal told CNBC that the company will soon be ready to go public but added that it is "not stressed" to do so "anytime soon" because the private markets have "proven to be incredibly liquid". Well, that’s pretty obvious for everyone… 🤷♂️
The USP 🥊 Launched in Germany🇩🇪 and Austria🇦🇹 in January 2015, N26 began as a current account with a Mastercard debit card. It has since moved into areas such as crypto and stock trading (both still in the works), attracting more than 7 million customers in two dozen countries (as of early 2021).
But the struggle is real though… 😬 Despite all the wins, it’s not rainbows and unicorns for N26. The company is yet to turn a profit and has faced some stiff headwinds over the last couple of years; withdrawing from the US market, facing scrutiny from German regulatory authorities, and dealing with a revolt from hard-pressed staff.
Based on the available info, N26 had around $4.8B sitting on its balance sheet and reported a net loss of $167.1M in 2020.
So what can we take away from this? Here are my thoughts:
✈️ THE TAKEAWAY
The odds aren’t in neobanks’ favor. First and foremost, we must note that lots of companies have been reevaluating the move to becoming publicly listed companies because of worries about higher interest rates and other world events (i.e. Ukraine’s invasion, Covid, etc.). Many industry analysts say it might be “months” before there’s a rebound in the valuations, with wild swings in the market complicating things. That said, lots of startups have also been turning to private equity to get funding. So don’t get surprised if N26 raises another $500-900M sometime soon. Second, the general market sentiment towards FinTech (=growth) stocks hasn’t been very positive, to say the least. Even with strong fundamentals, the industry’s gem Nubank has lost around 35% of its value since going public. Knowing N26’s numbers, I don’t see them doing any better. Zooming out, we can say that neobanks might be facing commoditization very soon. This means they will be competing both against each other and incumbent banks with limited ability to differentiate their offerings from their rivals’. And that inevitably will lead to M&As or liquidations.
Shares nets $40M to make investing social 💸
Funding + launch 💸🚀 After just securing $40M in Series A funding led by Peter Theil's Valar Ventures, London-based social investing FinTech Shares is going live and launching its app.
Having built up a 60,000-strong waitlist, Shares is now available for anyone in the UK to download via the Apple Store and Google Play, and hence promises to bring all the features users would expect from a social media app with a simple investment product.
The company expects to expand to other European countries in the near future.
The USP 🥊 Shares doesn’t want to be the next Robinhood, Freetrade, or Bitpanda. At the core, it’s all about making investing social.
Shares hence gives family, friends as well as experienced investors a single platform to meet, discuss, and make investments, fostering long-term financial wellbeing through sharing thoughts and experiences. So they could grow and enjoy their investments together. Social element sits like a cherry on top as social experience is something investors are already accustomed to, primarily using platforms such as Reddit, WhatsApp, or Telegram. Now you can find everything on a single platform.
The mechanics 🧰 With Shares, users can buy fractional shares — they can get started with as little as £1.00. There are no trading fees, but there could be some spread between the buy and sell price. Alpaca is the execution broker sitting in the back.
Can Shares be the next big thing in FinTech? Some thoughts:
✈️ THE TAKEAWAY
Venmo + Robinhood. Although retail investing has been experiencing some wild growth over the last couple of years, we must say that it’s still far from its peak. Crazy funding rounds and eye-watering valuations from the likes eToro, Trade Republic, among others, might indicate that the market is saturated, but it’s not like that at all. App Radar calculates that just 12% of UK adults now use an investment app. While that’s nearly doubled since 2019, it still leaves a large part of the population untapped. A similar trend is playing out across the continent as well. Industry-wise, while there are some regional leaders emerging in the neobanking/challenger banking space, we’re yet to see this when it comes to stock trading apps. Not to mention that Europe still doesn’t have anyone with the success of Robinhood in the US. Zooming out, we must also comprehend the changing trends in this space. The first generation of trading apps were all about democratizing access to financial markets and offering easy-to-use investing platforms. The second generation of trading apps should be more about social movement than anything else. And it’s just starting to emerge. That’s why Shares is like Venmo & Robinhood combined. But while Venmo’s social feed isn’t particularly useful, an activity feed for stock trading makes a lot more sense. It’s therefore going to be super interesting to see if Shares is able to lure people away from WhatsApp/Facebook/Telegram investment groups straight into their app. If they will, that’s undoubtedly the next big thing in FinTech.
🔎 What else I’m watching
Google Pay loans? 🤔 Google Pay India has announced that customers using the service in the country can now apply and receive personal loans through the company’s payment service app. The service was launched in collaboration with DMI Finance, an India-based digital finance company, aiming to provide transparent and smooth credit to Google Pay users. The financing scheme can offer loans up to INR 100,000 (approximately USD 1,328), repayable in up to 36 months. Is Google testing its Banking appetite in India now? 🤔
NFTs in Music🎵 Global music brands Billboard and Universal Music Group are partnering to launch ChartStars, an NFT based project of digital collectibles built on the Flow blockchain. This is Billboard's first scalable NFT project geared toward music fans. The collection will be comprised of artist-focused digital artwork that celebrates the achievements and milestones of the Billboard Charts. The items will feature officially licensed art including short visual clips from music videos and album photos.
European expansion🇪🇺 Freetrade has launched in Sweden, its second move outside of the UK and first into the European market as part of its plans to bring its stock trading to Europe. It will now offer Swedish investors thousands of local and international stocks and ETFs after receiving authorization from the Swedish regulator Finansinspektionen. Sweden’s general public will have to wait for several months, however, before the end of a closed beta period. In early 2021, Freetrade announced its first overseas expansion with the opening of an office in Australia. It plans also include wider launches across the Netherlands and Germany. Founded in 2016, the company has over 1.2M users, and a valuation at its last fundraise of c.£650M.
💸 Following the Money
Blockchain infrastructure startup Aligned raised $34M in funding to expand its Web 3 infrastructure and attempt to become the Amazon Web Services for blockchain.
Payments technology company Shift4 announced it is acquiring two other firms: Finaro, a cross-border eCommerce payments provider, and The Giving Block, which focuses on cryptocurrency fundraising for nonprofits.
NFT infrastructure startup Rarify raised $10M in a Series A fundraising round at a $100M valuation to ramp up hiring and product launches. Rarify will offer an API platform that lets companies create, manage and scale NFT products with simple integration.
👋 That’s it for today! Thank you for reading and have a productive weekend! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
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