Image Credits: mikroman6 / Getty Images
Welcome back to The Interchange, where we take a look back at the hottest fintech news from the past week. Better.com finally went public last week, and the stock performed worse than expected. On the other hand, Ephram’s better-than-expected earnings report boosted its shares. There was also a mega-rise, and also an acquisition. On another note, if you want to get The Interchange delivered straight to your inbox every Sunday, go here to sign up!
Better.com finally goes public
The biggest fintech news of the week centered around the good, very bad debut of Better.com on the public market. Or as my friend and colleague Alex Wilhelm describes it, Better.com had a Miserable.com week.
To recap, digital mortgage lender Better.com made its public debut on August 24th. To no one’s surprise, the stock wasn’t exactly a hit among public investors. Actually, it was a loud bomb. As of Friday, August 25, the stock closed at just $1.19. Shares of SPAC partner, Aurora, were trading at $17.45 on Wednesday, before Better.com officially went public. This is a company that planned to go public two years ago at a valuation of $7.7 billion.
Now, we knew that Better.com’s stock wasn’t exactly going to do well. But I’m not sure anyone expected this hovering share price that gave Better.com a market cap of only $19.14 million.
A few weeks ago I had the opportunity to interview Vishal Garg, CEO and co-founder of Better.com, in anticipation of the company going public through a SPAC merger with Aurora Acquisition Corp. After writing for almost two years I will tell you that the company went from multiple (and mostly unsuccessful) layoffs, all the various ways Garg angered former employees and executives, and the company from huge profits in 2020 to huge losses in 2022 and beyond Moving on, I expected the interview to be a bit awkward. The last time I interviewed Garg was in 2020, when everyone and their brothers were refinancing their homes and Better.com was making cash. Finally, Garg was on his best behavior – displaying charm and charisma that undoubtedly managed to win over investors such as SoftBank, Active Capital, Ping An Global Voyager Fund, Alley Financial and Citi, and others who collectively Invested hundreds of millions of dollars in the company.
Some highlights of the interview include the following:
- Garg admitted that he was nervous about the IPO.
- The executive also said that he “did a lot of leadership training” and realized he needed to treat his employees the same way he treats customers.
- Despite all of the company’s challenges, going public meant receiving $550 million from SoftBank.
- Garg continues to promote the company’s technology (which even the company’s critics will admit is great) and hopes that changes in the housing market and a decrease in mortgage rates in 2024 could work in its favor, if both be successful
On that note, on the same day that Better.com went public, the average 30-year mortgage rate rose to 7.23%, a 22-year high, according to Yahoo Finance. With rates that high, Better.com’s attempt to turn around its business will be even more challenging.
Phil Haslett, co-founder and chief strategy officer at EquityZen, had this to say about the company’s choice to move forward with its delayed SPAC despite all the negative headlines over the past 20 months. Via email he wrote: “Better.com’s senior leadership (and its investors) are not surprised that the stock is down 90%. The D-SPAC was a way to raise $565 million. No one else was going to give them $500 million. Vishal Garg saw that there was one last wedding dress for sale, and he took it. He knew it wouldn’t be right, but he didn’t care. He got it done.”
To hear the Equity podcast team delve into more details about the company and its public debut bomb, check out the link below. – Mary Ann
Image Credits: better.com
Affirm that this week is great
Better.com may have had a rough week, but at least one other publicly traded fintech company’s stock fared better.
Shares of Affirm were trading up nearly 30% to less than $18 on Friday afternoon after the company released its fourth-quarter and fiscal 2023 earnings. The company said it is exiting the year with achieving profitability on an adjusted operating income (AOI) basis and that its revenue grew 22% year-over-year to $446 million. And, as reported by CNBC, Affirm “also gave strong guidance for the first quarter of the fiscal year, forecasting revenue of $430 million to $455 million, while analysts expected $430 million.”
Third Bridge analyst Kevin Kennedy offered some thoughts on the results after interviewing several executives in the fintech sector, telling TechCrunch that “even with generally positive results, Affirm’s continued operating losses and loss margin are projected to exceed 11 percent.” It’s hard to ignore the increased points compared to last year, resulting in an accumulated loss of $2.6 billion. On the plus side, Kennedy also said that the debit+card product was “a step in the right direction, and marginal customers The acquisition will play a key role in the road to profitability by driving better monetization of existing users without cost pressures. He added that he is particularly interested in seeing the growing adoption of Affirm in the travel, appliance and auto industries. In conclusion, he added: “Our experts believe that Affirm’s future as a standalone business hinges on the company’s ability to develop and effectively cross-sell a broad spectrum of financial services products.” BNPL offerings from major diversified tech players such as PayPal, Apple, and Cash App (Block) are becoming increasingly competitive.”
For context, Affirm’s stock is still trading below its 52-week high of $27.26, but has more than doubled from its 52-week low of $8.62.
Check out our previous interview with the company’s CTO here. – Mary Ann
weekly news
Sara Perez reports on a new approach starbucks Lovers will be able to pay for their favorite beverages without a phone. The contactless checkout method comes as the coffee giant works to move people through drive-thru’s faster. Find out how it works.
Here are two stories on India’s retail giant from Manish Singh Reliance Retail, First, the company’s spinoff entity, Jio Financial Services, made its public debut. Second, Reliance is testing a Sound Box payment system that instantly confirms and announces when a payment is successful. learn more.
And this week on Equity, Mary Ann explores Latin America’s fintech and AI landscape with partner Mercedes Bent on the early stage team. Lightspeed Ventures and co-head of Lightspeed’s LATAM region and angel fund. She spoke on a range of topics, including how and why Mercedes started investing in Latin America, and why she thinks the region is more resilient than others; why we get caught up in the hype cycle when it comes to the intersection of AI and fintech; And why generative AI and fintech aren’t always the best combination.
other things we’re studying,
Klarna boasts of expansion and growth across Europe due to its ‘dial back’ commitments to smaller companies. lyrics of to curlPosted by CEO Sebastian Siemiatkowski an attractive thread On X, “details the challenges of trying to hire and manage someone who does something you have no idea how to do.”
How fintech company Marketa is using AI to help consumers
Hadlee launches mobile app to enhance access to savings schemes
look who’s partnering now,
OZ Câmbio partners with Nium to improve the Brazilian SME market and encourage international expansion
Treasury Prime partners with Liberty Bank
Cross River Bank and Current launch credit-building product
Engagement Banking fintech Backbase partners with Sevimoney
Funding and M&A
As seen on TechCrunch
Fintech startup Ramp raises $300M at 28% undervalued $5.8B
MoneyPoint approves acquisition of Kenyan fintech Kopo Kopo
This venture-backed startup has quietly bought over 80 mom-and-pop shops
and elsewhere
Yahoo acquires social investing platform Commonstock (Disclosure: Yahoo is TechCrunch’s parent company)
LemFi Raises $33M Series A to Simplify Remittances for Immigrants
Coverly raises $7.6M for B2B BNPL
Why Ventura Capital and Peter Thiel Are Backing This Silicon Valley RIA
Discover the Fintech Phase of Disrupt 2023
Check out the fintech stage at TechCrunch Disrupt 2023 in San Francisco, September 19-21, where we cover Web3, banking and more. Still available until last minute. Save 15% with code Interchange. register now,
Image Credits: bryce durbin
Source: techcrunch.com
