Mastercard teams up with Bakkt to bring crypto to the mainstream 😮; Disappointing results from Robinhood 😕; Brazilian FinTech giant Nubank finally files for a blockbuster IPO🇧🇷
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Good day Everyone,
And happy Sunday! Hope your week was great & productive. To make the most of your time during this long weekend, I invite you to take a look at the three stories that were moving the headlines this week in the financial technology world. 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 wonderful stories from this week:
Mastercard teams up with Bakkt to bring crypto to the mainstream 😮
The partnership 🤝 Card network behemoth Mastercard and digital asset platform Bakkt have just announced they are partnering up to allow merchants and banks to build cryptocurrency into their offerings. The two plan to also shake up the way consumers can collect loyalty rewards.
The WHY of the deal 👉 The aim of the initiative is to reportedly offer “quick access to cryptocurrency capabilities”. This effectively means that with the help of Bakkt, Mastercard’s partners – that includes banks, merchants, and FinTechs – will be able to roll out crypto investment tools for their users through custodial wallets. They will also be given a route to issuing branded crypto debit and credit cards.
More interestingly, Mastercard also plans to integrate crypto into its loyalty products, meaning rewards points can be spent in crypto rather than loyalty points.
✈️ THE TAKEAWAY
This is huge. A perfect illustration of that is the fact that the shares of Bakkt were up more than 100% in early afternoon trading on Monday, at which point trading was halted amid exceptionally high volume. And the company went public via a SPAC only last week. At the core, this move is another step towards bringing the universe of cryptocurrency closer to bridging the gap with the traditional payment industry. Given the rising demand for crypto, this is a no-brainer move by Mastercard. More importantly, it seems that the credit card company is very bullish on the digital asset space as a whole - one can remember that recently it agreed to acquire CipherTrace, a firm that analyzes blockchains for illegal transactions. Visa, what’s your move? 😎
Disappointing results from Robinhood 😕
The earnings call 📞 Retail brokerage app Robinhood has seen its shares falling as much as 10% after the zero-commission trading platform missed badly on revenue expectations as its cryptocurrency revenue fell sharply from the second quarter’s record high.
The numbers 📊 Despite that the third-quarter (Q3) earnings for online investment and trading platform showed some growth performance, Robinhood has missed the estimates. Here are the key figures:
Total net revenue came in at $365M, missing a Refinitiv estimate of $431.5M. This was well below the second quarter’s revenue of $565M, which was mainly fueled by a massive surge in crypto trading.
Third-quarter transaction-based revenue totaled $267M, with only $51M coming from cryptocurrency trading. Revenue from crypto trading totaled $233M in the second quarter, helped by interest in meme coin Doge.
Robinhood reported a net loss of $1.32B, or $2.06 per share. Wall Street was expecting a loss of $1.37 per share, according to Refinitiv.
The company also saw a slowdown in user growth. Monthly active users totaled 18.9M, down from 21.3M in the second quarter.
✈️ THE TAKEAWAY
Unfulfilled promises. Back in August, I’ve written that Robinhood looks like a crypto broker. And it definitely appeared like one as it discovered crypto as its profit puppy, with Doge being the key driver of their crypto and overall revenues. Obviously, that was a huge risk and it did materialize. Cautious to no actions in the crypto domain (not adding demanded Shiba Inu, for example) has reduced crypto trading activity that has effectively led to significantly fewer new funded accounts and lower revenue. Moreover, starting Wednesday, half of the tranche I convertible notes are coming unlocked as well as some employee shares, which totals about 62M shares. On November 10, the other half of tranche I will be tradable and on December 1 all shares will be fully tradeable. That said, maybe it’s about time to short the $HOOD? 🤔
Brazilian FinTech giant Nubank finally files for a blockbuster IPO🇧🇷
Confidential. For now 🤫 Brazilian FinTech superstar Nubank (now just Nu), which is backed by Warren Buffett’s Berkshire Hathaway, has confidentially filed for an initial public offering (IPO) on the New York Stock Exchange (NYSE), Bloomberg reported.
Nu’s listing is anticipated to take place in December, according to the report, which cited unnamed sources. Negotiations are ongoing, and details could change.
Blockbuster IPO🔔 In June, Nu raised a $750M round led by Berkshire Hathaway at a $30B valuation, making it one of the most valuable unicorns in the world. Since its 2013 inception, Nu has raised $2.3B in capital, with investors such as Sequoia Capital, Tencent, Ribbit Capital, Kaszek, QED Investors, and others.
Nu reported earlier this month it had turned a profit in the first half of 2021 in its Brazilian operations, could seek a valuation of more than $55B, which would make it the biggest IPO from Latin America. Ever.
✈️ THE TAKEAWAY
It’s about time to take off 🚀 After starting off in 2013 with just a credit card offering, Nu now counts more than 41M customers globally making it the biggest neobank on the planet. Furthermore, if one takes into consideration the fact that the IPO market in the United States is showing no signs of slowing down (companies have already raised an all-time record of over $250B through US IPOs this year), it seems to be perfect timing for the Braziliant FinTech superstar to go public. As I’ve written in August, Nu is a brilliant fit for Wall Street. The LatAm FinTech giant will undoubtedly be one of the most interesting (and probably - successful) IPOs this year.
🔎 What else I’m watching
UK is concerned about BNPL🇬🇧 In the United Kingdom, buy now, pay later (BNPL) is in the regulatory crosshairs. To that end, a new call for a consultation/report on buy now, pay later (BNPL) by HM Treasury (the government's economic and finance ministry) aims to establish frameworks to monitor and introduce new policies in response to BNPL’s explosive growth in the U.K. In the report, the regulator noted that along with the rise of BNPL, “there has been a rise in concerns about whether BNPL is giving rise to consumer detriment.” The sector is largely unregulated at present, and the report noted that a “balance” must be created between protecting consumers and making new financial innovations available to them.
Crypto-as-a-Service 🚀 Singapore-based Nium has launched a global Crypto-as-a-Service (CaaS) solution and has announced the extension of its Banking-as-a-Service (BaaS) solution to the US. Initial API-based elements from the new Crypto-as-a-Service offering will allow financial institutions to add in-demand capabilities for cryptocurrency investment. The cryptocurrency investment services will support 5 cryptocurrencies in the US in 2021, with the list of supported currencies growing to 20 in 35 countries in 2022.
Bitcoin mining IPO🇦🇺 Australia-headquartered Iris Energy has become the latest energy company-turned Bitcoin mining firm seeking to list in the U.S via an initial public offering (IPO). The firm filed an F-1 form to the Securities and Exchange Commission on Monday with a placeholder goal of raising $100M and plans to list on the Nasdaq stock exchange under the ticker IREN.
Challenger bank in SA🇿🇦 Banking software company Temenos has announced that microfinance company Barko plans to enter the retail banking market in South Africa with a new digital bank. The digital bank is to be built on Temenos Transact and powered by The Temenos Banking Cloud. Barko will leverage the full front-to-back services, giving the new bank total control to create banking products that are easy to consume, configure, and integrate with external applications. With Temenos, Barko aims to disrupt the banking status quo with more accessible and affordable banking to advance the financial wellbeing of millions of South Africans underserved by traditional banks.
💸 Following the Money
US-based FinTech Brex has raised $300M in funding that propels it to a valuation of USD 12.3 billion. The company, which sells a credit card tailored for startups, with Emigrant Bank currently acting as the issuer, had submitted an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Brex Bank.
Immunefi, a crypto startup that helps DeFi protocols launch bug bounty programs on its platform, has raised $5.5M in a seed funding round. Electric Capital and Blueprint Forest co-led the round, with Framework Ventures, Bitscale Capital, IDEO Colab, The LAO, BR Capital, and North Island Ventures, also participating, among other investors.
UK-based digital bank Monzo has planned discussions with a number of investors about raising at least GBP 300M in new funding, according to Sky News.
Visa has joined Mastercard as an investor in Deserve, the startup that offers a credit card with bitcoin rewards in partnership with BlockFi.
👋 That’s it for today! Thank you for reading and have a productive rest of the weekend! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
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