Almost half a trillion dollars has been wiped from the valuation of FinTech companies, according to a report from the Financial Times.
It stated that over 30 FinTech companies has listed in the US since the start of 2020. While the pandemic highlighted an opportunity for digital services, the rising interest rates and lack of profits have impacted the initial excitement,
The report stated that shares in recently listed FinTechs have fallen by an average of over 50% since the start of the year. This is compared to a 29% drop in the Nasdaq Composite.
It continued by stating their cumulative market capitalisation has fallen $156bn in 2022 and if each stock is measured from its all-time high, around $460bn has been lost.
There are some private companies that are also feeling the pressure. Last week, it was revealed that Klarna saw its valuation drop by 85%. The FinTech company’s valuation dropped to $6.7bn, which comes just a year after its valuation was $46bn.
In a statement announcing the funding round, it said, “In its statement, it said, “The fresh investment in Klarna occurred during possibly the worst set of circumstances to afflict stock markets since World War II: high inflation, rising interest rates, mounting fears of a recession, the aftereffects of the first global pandemic since 1918, strains on commerce caused by supply chain disruptions, rising gas prices, and, especially in Europe, the dislocations caused by the war in Ukraine.”
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