Signals: Are public fintechs okay?

Hello, Fintech Friends!

The IPO window is open again. In just a couple of months, we’ve seen three IPOs and one SPAC listing: a stablecoin issuer Circle, neobank Chime, and two brokerages, eToro and Webull. The market welcomed them warmly, bringing fresh optimism for fintech nerds like me.

However, under the surface, things look less encouraging. The TWIF Index is down year-to-date, underperforming both the S&P 500 and the Nasdaq Composite. Visa is doing ok, but American Express and Mastercard are flat. Fiserv, Global Payments, PayPal, and Block are all down in double digits. Even the seemingly untouchable FICO has taken a hit.

Maybe it’s because the innovation is finally starting to bite the incumbents. Stablecoins threaten Visa, Mastercard, and Amex. Stripe and Adyen are out-innovating payment giants like Fiserv, Global Payments, and FIS. And Coinbase and Robinhood don't have to fight the regulators anymore, and can finally unleash their engineering power to change how people bank.

Or maybe the market sees limited upside in the large fintech players and is now chasing growth in smaller, riskier companies. That would explain the rally in stocks like Sezzle and Dave. And that would explain why Oscar and Lemonade are trending on X again. I am a die-hard optimist, but this is starting to feel a bit like 2021.

Is this the last thrust of this cycle?

Jevgenijsp.s. Have feedback? Ping me on X/TwitterHappy to hear how we can improve this column!

The picture of the best-performing fintech stocks has not changed much since my last article. It's still the same group of small caps and Brazilian fintechs (and Robinhood, which continues its crazy run). One company is missing from the chart below, but it would easily top the list: Circle (more on that in a moment).

As I noted in my intro, (some) public fintech companies might not be ok. As you can see from the chart below, year-to-date performance across many categories is less than inspiring. If not for a few exceptions, most of the categories would be in red.

Let’s take a closer look at the three fintech IPOs that happened this year...and one that didn’t.

Circle is a stablecoin issuer best known for USDC, a dollar-pegged digital currency used for payments and trading across crypto and traditional finance. A stablecoin issuer accepts customer deposits, issues an equivalent amount of digital tokens on a blockchain, and allows users to redeem those tokens back into dollars at any time. As of this writing, there were $61 billion of USDC in circulation, making it the second-largest stablecoin after Tether ($159 billion).

Stablecoin issuers make money by investing the cash reserves backing their tokens, usually in safe assets like U.S. Treasuries, and earning interest on those holdings. In 2024, Circle generated $1.68 billion in revenue (up 16% YoY), $156 million in Net income (down 42% YoY). The decline in profitability was mainly driven by rising stablecoin distribution costs. In 2024, Circle paid $1.01 billion in incentives to its partners (up 40.4% YoY), with Coinbase receiving the largest share.

The main bearish case against Circle is that its revenue depends on interest income, which will drop as the Fed cuts rates. Additionally, the company pays more than half of its revenue to its distribution partners like Coinbase and Binance. But this view misses the bigger picture. The downside of lower rates is limited (unless we return to zero rates), while the upside from growing USDC adoption (and building additional products around it) is still wide open.

Circle’s IPO will likely be remembered as one of the most underpriced in history. It went public at $31 per share and now trades at $240, giving the company a market cap of $54.7 billion. However, it was probably the best-timed IPO ever, coming just days before the U.S. Senate passed the GENIUS Act, which legitimized stablecoin issuance in the United States.

Read more: "The Weekly Stable", the #1 source for stablecoin insights

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IPO price: $31 per share. Current price: $240.28 (+675%)

Chime is a leading U.S. neobank, serving 8.6 million customers. Through its partner banks, it provides FDIC‑insured checking and savings accounts, a debit card, early access to paychecks (MyPay), fee-free overdraft protection (SpotMe), and credit-building tools, all with no monthly fees or minimum balance requirements.

In 2024, Chime generated $1.67 billion in revenue (up 31% YoY) and $1.25 billion in transaction profit (up 37%). The company reported a GAAP net loss of $25 million, a significant improvement from the $203 million loss the year before. Adjusted EBITDA was negative $7 million, also narrowing sharply from negative $189 million in the prior year.

The main bearish argument is that Chime isn’t a bank and relies on the Durbin exemption to earn higher interchange by partnering with exempt banks. But that misses the bigger picture: Chime has attracted more than 8 million customers and become the primary bank account for 2/3 of them, which is the holy grail of banking and something very few neobanks have accomplished.

Chime priced its IPO at $27 per share, raising approximately $700 million for the company, or $864 million in total, including shares sold by existing shareholders. After an initial rise to nearly $45 on the first day of trading, Chime's stock has settled at $29.53, giving the company a market cap of $10.8 billion...or less than half its 2021 private valuation of $25 billion.

Read more: "The Chime Test", Fintech Takes

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IPO price: $27 per share. Current price: $29.53 (+9%)

eToro is a multi-asset retail investing platform operating in 75 countries, with key markets being the U.K., the E.U., and Asia Pacific. Founded in 2007, eToro pioneered the concept of social investing. While only 3.6 million users have funded accounts, 38 million engage with its social feed and educational tools. You can think of eToro as X, but with built-in stock and crypto trading.

In 2024, eToro reported a net contribution of $787 million (up 41% YoY). This metric, defined as total revenue and income minus the cost of crypto assets sold and margin interest expense, is a more accurate reflection of eToro’s income than revenue, as the company acts as a principal in crypto transactions. Net income for the year rose to $192 million (up from $15 million the year before).

Any brokerage today faces the competitive threat of Robinhood, which is a much larger player with greater resources. I previously compared eToro to X, but with built-in stock and crypto trading. So what happens if the rumors are true and X enters the trading space? That said, eToro’s global footprint is also its key defense. It’s not just about licenses and availability: eToro has localized and personalized its app across the many countries where it operates, giving it an edge that’s hard to replicate.

eToro priced its IPO at $52 per share, and the stock now trades at $59.50, giving the company a market cap of around $5 billion. Back in 2021, eToro attempted to go public via a SPAC at a valuation twice that size, but the deal fell through. Those were the days, right?

Read more: eToro Investor Relations

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IPO price: $52 per share. Current price: $59.50 (+14%)

Klarna is one of the world’s largest Buy Now Pay Later lenders, alongside Affirm, Block’s Afterpay, and PayPal. What sets it apart is that Klarna is a licensed bank in Sweden and funds its loans with customer deposits collected across Europe. It’s also geographically diversified, with the U.S. as its largest market (30% of 2024 revenue), followed by Germany (27%) and the U.K. (12%).

In 2024, Klarna generated $2.8 billion in revenue (up 23% YoY) and posted a net income of $21 million, a sharp turnaround from a $244 million loss the year before. Its business is focused on short-term loans, the classic BNPL model, which made up 76% of its GMV in 2024. As a result, unlike Affirm, Klarna earns most of its revenue from merchant fees (75% of 2024 revenue) and consumer charges (16%).

Klarna’s broad geographic presence and banking license make it a compelling investment case, especially for investors looking for exposure to European fintech (unfortunately, there aren't many European public fintech companies). The bear case centers on rising competition, with Affirm expanding aggressively into Europe and PayPal making BNPL a core part of its growth strategy.

Klarna postponed its IPO, officially citing market conditions. But the real reason may be slowing growth. In Q1 2025, Klarna reported GMV growth of just 13%, the slowest among its peers, and a net loss of $99 million, more than double the $47 million loss from the same quarter last year. If my read on the market is correct, Klarna might want to go public while the IPO window is still open.

Read more: "Is Klarna Fintech's Main Character?", Fintech Brainfood

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According to media sources, Klarna was aiming to get a $15 billion valuation, which compares to $20 billion for its competitor Affirm.

We are introducing a new category: e-commerce and on-demand platforms with sizeable fintech arms. Think Mercado Libre (and Mercado Pago) and Sea Limited (and SeaMoney/Monee). They may not be fintech companies in the traditional sense, but they are major players in their regions, reshaping how people and businesses bank.