The rising popularity of the virtual land 👀; Nubank’s downsized IPO raises questions ⁉️; PayPal’s BNPL volume surges 400% 🤯
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Good morning Everyone,
And happy Saturday! The week was a real blast, hence, 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 really interesting FinTech stories from this week:
The rising popularity of the virtual land 👀
Breaking🔥 A virtual land plot in the Axie Infinity NFT game sold for a record price of 550 ether (about $2.4M) last week.
The plot is part of the "Genesis" land type, which Axie Infinity describes as "extremely rare." Genesis land is located in the center of the Axie Infinity map and is capped at 220 plots.
One can note that there are different types of land in Axie Infinity, including Mystic and Arctic, and they are all collectively called Lunacia. Lunacia is the homeland for Axies — in-game fantasy creatures that are required to play the game.
But what is it? 🤔 Axie Infinity is a popular play-to-earn NFT game that enables users to earn tokens called small love potions (SLP) that can be exchanged for cash or other cryptocurrencies.
It can be reminded that back in October, Sky Mavis, the company behind Axie Infinity, has raised $152N at a nearly $3 billion valuation led by the likes of Andreessen Horowitz and Mark Cuban.
Hitting records 👀 In February, nine plots of land on Axie Infinity were sold for over 888 ETH (around $1.5M at the time and nearly $4M at current prices).
Earlier this week, Canadian investment firm Tokens.com purchased virtual land in Decentraland for a record price of $2.5M in MANA, the native token of Decentraland.
✈️ THE TAKEAWAY
Meta, it’s all meta. This and other transactions are part of the latest surge of interest for digital real estate in the metaverse economy. Crypto asset manager Grayscale estimates that the metaverse has the potential to have a revenue opportunity of $1T across the advertising, social commerce, and digital events sectors. And that’s massive!
Nubank’s downsized IPO raises questions ⁉️
The news 🗞 Brazil’s Nu Holdings, the parent company of the popular Latin American neobank & local FinTech heavyweight Nubank, just announced a reduction to the expected price of its public offering.
The well-funded FinTech and the biggest neobank globally by the number of customers is going to be listed in the United States and its native home market Brazil later this year.
The change 👉 In its first F-1 filing, Nubank indicated that it expected to sell its shares at a price of up to $11 per share, raising a maximum of $3.66B in its public-market flotation.
The company now anticipates a smaller $9 per-share IPO price maximum and a $2.86 billion max raise.
The effect 📉 The above downsize means a valuation drop from as much as $55 billion in August to roughly $40 billion today.
What does that imply about the company, the neobank industry, and the IPO market as a whole? Read the takeaway👇🏼
✈️ THE TAKEAWAY
Mixed signals. At the general level, it’s clear that meteoric valuations have taken a hit over the last month. Then it seemed that everyone wanted a piece of the bank of the future and almost any price seemed reasonable. While the price revision doesn’t imply that legendary Buffett doesn’t support Nubank anymore - by no means - rather it shows that the market has taken a more cautious stance. Also, earlier this month, the electric pickup truck maker Rivian has experienced the upsized and meteoric debut that was the last mega-hot IPO to come down the chute. That said, Nubank’s run-up to its launch does not compare favorably. One can also look at Robinhood, another red-hot IPO, that is currently trading circa 50% below its market debut. This brings us to another point, more tied to the overall FinTech sector in general. Nubank’s downsized offering is also probably an examination of the sector as such, perhaps indicating that the enthusiasm for global neobanks may be diminishing.
PayPal’s BNPL volume surges 400% 🤯
The news 🗞 Payments giant PayPal’s CEO Dan Schulman told CNBC that the company’s buy now, pay later (BNPL) program generated about 750,000 transactions on Black Friday alone, reflecting 400% year-over-year (YoY) growth. That’s massive when you think about it…
Furthermore, PayPal said it has processed more than $1 billion in volume from its BNPL program in November and added more than 1M first-time monthly users -which effectively puts PayPal’s BNPL paly at “well over 10M consumers.”
More context 👉 A growing number of consumers are planning to use BNPL to stretch their holiday spending this year, primarily because it’s flexible, easy, and avoids one paying the credit card interest (be cautious here though).
That said, PayPal’s BNPL program will be highly sought-after through the holiday season making it harder for BNPL incumbents to compete. Here’s why:
✈️ THE TAKEAWAY
More volume + more threat. It’s already clear that BNPL will be an important volume-generating tool for the payments giant in Q4 and beyond. Given BNPL’s surge in popularity, I wouldn’t be surprised if PayPal would pass their Q4 2020 numbers when the payments firm processed $277B in total payment volume (+39% YoY). On a bigger level, PayPal poses a significant threat to BNPL incumbents like Afterpay or Klarna. While last year BNPL incumbents mostly vied for market share against each other, this year they face a flood of competition from banks and payment titans like Mastercard and Visa, just to name a few. PayPal’s vast customer base and merchant network give its BNPL program a large addressable market to work with that could be hard for incumbents to compete against this holiday season and beyond. That said, being down circa 20%, $PYPL looks really undervalued…
🔎 What else I’m watching
Monzo BNPL launch 💳 UK-based online bank Monzo has announced it now offers virtual cards for customers who want to make contactless payments using the Mondo Flex BNPL service. Released earlier in September 2021, Monzo Flex allows eligible clients to get a credit limit of up to GBP 3,000 and then use it for products worth more than GBP 30 in three equal installments, at 0% interest. The six and 12 installment plans are also available with 19% interest.
Potential FinTech M&A 👉 JP Morgan Chase is considering an investment in a Greek startup that offers banking and payments services, according to a report.
According to Bloomberg, the US bank is one of several companies considering buying or partnering with Viva Wallet. Viva Wallet is working with a corporate adviser to explore its strategic options, sources told Bloomberg, who said the Greek company is seeking a valuation of at least €1.5B in any transaction.
Bitcoin rewards? 🤔 Bitcoin rewards company Lolli has joined forces with food delivery platform Grubhub to allow users to earn bitcoin on every Grubhub order, according to a press release. Customers will earn $5 in bitcoin on their first Grubhub order and $1 in bitcoin on all future orders. To accrue bitcoin on Grubhub orders, users must download and activate the Lolli app for iOS on mobile or use the extension on the web before placing an order. Once $15 in confirmed Lolli rewards has been accrued, users can keep bitcoin in their Lolli.com wallet or transfer it to a virtual wallet, according to the announcement.
💸 Following the Money
Avocado Guild, a blockchain gaming startup similar to a16z-backed Yield Guild Games, has raised $18M in a Series A funding round.
LATAM’s biggest e-commerce platform Mercado Libre has borrowed $375M from Citi Bank to expand its credit offer to SMEs, entrepreneurs, and consumers across Mexico and Brazil.
India-based FinTech Cashfree Payments has announced an equity investment of $15M in UAE-based payment gateway provider Telr to expand in the MENA region.
👋 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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