Now Is the Time To Invest In Fintech
11 Fintech companies have gone public via IPO in the first month of 2021. The public trading trend emerges as society continues turning to Fintech as a turnkey solution in powering digital financial services. Pandemic-related disruptions and distancing have further emphasized the rising need for digital solutions over traditional banking and finances. As such, there may be more Fintechs expected to join the recent public trade wave.
Fintech companies range from investing and savings apps to foreign currency transfer platforms and solutions that empower corporate credit cards. Collectively, they form a developing ecosphere of fuss-free financing, which continues to grow in traction.
Flywire – A Decade-long Journey
Flywire, a Boston-based company that manages foreign currency payments, is one of Fintechs that gained a sizeable growth in valuation during its recent IPO. The company was founded back in 2009 to provide students with an affordable method of paying off their study loans by reducing the cost of exchange rates.
The Fintech company eventually expanded to include financial solutions for corporate clients in the healthcare and travel sectors. Flywire now supports over 2200 clients in over 130 currencies across 240 countries. The company’s revenue increased by 39% to $131.8 million in 2020.
Flywire estimated net proceeds from its IPO to value at $263.7 million after deducting underwriting discounts and commissions and estimated offering expenses. On the first day of Flywire’s public trading on NASDAQ (with ticker symbol FLYW), the company’s evaluation increased by 4%, to $3.5 billion. Flywire shares further rose to $34 per piece from $24 per piece during its initial IPO.
Flywire is based in Boston, representing a diversification in the Fintech IPO scene, which traditionally featured New York and San Francisco flotations. Investors may look forward to a rise of more novel trading opportunities to monitor into 2021.
Acorns – A Special SPAC Deal
Investment and savings company, Acorns Growth Inc., plans to merge with blank-check company Pioneer Merger Corp. to form a SPAC (special-purpose acquisition company) in the second half of 2021, which estimates the startup valued $2.2 billion and $450 million cash balance in closing. The new entity, named Acorns Corp., will continue to manage over 4 million subscribers in the US and feature a host of celebrity backers such as J Lo, Dwayne Johnson, and Ashton Kutcher.
The investment and savings company was founded in 2014 to provide debit and credit card users with the convenience of rechanneling their spare change into trade investments. The company hit record growth in the first quarter of 2021, doubling subscriber numbers to 4 million from the fourth quarter of 2020.
Acorns continue to flourish in response to the pandemic’s disruptive impact on the economy as more people turn to cash stashing and investment services. The rising interest in the investment app may also relate to the emerging trend of popular meme stocks such as GameStop.
Acorns Corp. investors may look forward to an added incentive, as Acorns CEO Noah Kerner and Pioneer sponsors intend to give 10% of their personal company equity for the support. Acorns Corp. will be positioned on NASDAQ with the ticker symbol OAKS as an homage to their commitment to planting the seeds to users’ long-term financial best interests.
Investors may look forward to Acorn Corps’ steady growth as the company plans to increase its user base to 10 million by 2025. Acorn CEO shared, “now was the time to go public to accelerate our growth and get the tools of responsible wealth-making in everyone’s hands as fast as possible, when they need it most.”
Alkami Technology Inc. – On the Radar
Alkami Technology Inc (NASDAQ: ALKT) is a cloud-based digital banking provider for American investors, which recently took the IPO route. Cloud-based solutions are high in demand as more organizations and users rely on their accessibility, scalability, and security. Alkami continues to serve over 10 million users, seeing an increase of 28% year-over-year.
The company started off the opening months of 2021 with a successful IPO and has proven a successful annual revenue growth of 43%. Alkami continues to expand as it recently signed its 10th bank in the commercial banking space.
Investors may look forward to increased growth into the year, according to the outlook of Alkami’s management. Leaders expect the company’s total revenue to hit $144 -$148 million by December 2021.
The Company’s CFO, Bryan Hill, stated, “Our financial plan for 2021 will focus on strategic investments in both our go-to-market and innovation areas of the business in order to accelerate the adoption of what we believe is the best-in-class digital banking platform for FIs.”
Prospectors have suggested Alkami’s undervalued fintech stock, with consensus price targets at $120, which might increase in time if the company continues to perform at a consistent level. Additionally, recent trade trends have shown that cloud-based web services continue to thrive in the modern market, with companies such as Cloudstrike (NASDAQ: CRWD) with high sustained YOY revenue growth.
While Alkami may exhibit slower growth than some cloud-based companies, investors should not underestimate its potential, as the company has exceeded consensus in past assessments.
Closing Thoughts
Fintech investing will continue to grow and expand with the advancement and widespread use of AI, machine learning, and improved cyber security. For example, the recent release of GPT-3 uses deep learning to recreate human-like text, which may automate and optimize future financial services. Now is an opportune time for investors to consider the long-term trajectory of the digital movement, and how they can improve their portfolios by putting their money on the players who will drive that change.
Want to learn more about fintech? Read our guide to types of fintech!
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