Priya PatelTLDR:
- Investors are gearing up for a potential IPO surge, particularly in the FinTech sector.
- Despite the demand for deals and IPOs, many FinTech offerings have underperformed, with only a few trading above their offer price.
Investors are eyeing a potential surge in initial public offerings (IPOs), especially in the FinTech sector. Startups, particularly in the FinTech space, are looking to go public to raise capital, with companies like Monzo and Zilch leading the way. The buy now, pay later (BNPL) space, in particular, is expected to see significant growth in the coming years. However, despite the hype surrounding IPOs, many FinTech companies have struggled in the market. Of the nearly four dozen FinTechs tracked, only a handful are trading above their offer price, with most seeing double-digit percentage declines and low market caps, making them potential acquisition targets.
While investors are paying up for growth, the lack of profits is a concern, with only a small percentage of companies in the sector showing earnings. Deals in the payments and payment technology space are already making waves, with rumored acquisitions and private equity buyouts. Nuvei, a profitable company with a strong operating profit, is reportedly in talks for a buyout. The mixed performance of FinTech IPOs and the high price-to-earnings ratios in the sector may serve as a caution for investors looking to capitalize on the potential IPO frenzy.
