Fintech Headlines: August 22 - 28, 2022

This Week’s Gainers and Losers

Legend: 5-Day return, closing stock price as of Friday

SoFi gets clarity on student loan moratorium

This week President Joe Biden announced that he will forgive up to $20,000 in federal student debt to eligible borrowers (earnings under $125,000 a year), and will extend the student loan payment moratorium one last time, until the end of 2022. “Nearly 45 percent [of borrowers] can have their student debt fully canceled. That’s 20 million people, who can start getting on with their lives,” said Biden in the announcement.

This was an important announcement for SoFi ( ). SoFi's student lending business was decimated by the student loan payment moratorium, which came into force at the onset of the pandemic. Thus, the company originated over $2 billion per quarter in student loans in Q4 2019 and Q1 2020, but the volume came down to just $400 million in Q2 2022. SoFi's business rests on refinancing student loans, and the borrowers didn’t rush into refinancing while waiting for the President’s decision.

As I wrote in my company’s Q2 2022 earnings review, SoFi desperately needed the payment moratorium to end, as, in my opinion, it starts exhausting its growth potential in personal loans and needs a boost from student lending to continue growing. With the moratorium finally coming to an end, we might expect SoFi student loan originations volumes to pick up as soon as Q4 2022.

✔️ Biden cancels $10,000 in federal student loan debt for most borrowers✔️ Student loans: U.S. borrowers ‘have been waiting’ for relief, SoFi CEO says✔️ Student loan moratorium ending will be a tailwind for SoFi, says Mizuho’s Dan Dolev✔️ Biden’s Student Loan Plan Provides ‘Clarity’ for SoFi, Analysts Say. Why It’s a Buy.

Affirm and dLocal report Q2 2022 results

This week Affirm ( ), one of the leading Buy-Now-Pay-Later players globally, and dLocal ( ), a merchant acquirer servicing large enterprise customers in emerging markets, announced their Q2 2022 results (this was also the final quarter in Affirms fiscal year 2022). Both companies reported strong quarters, yet their stock prices were down double-digits following the earnings report.

Affirm reported 77% YoY growth in Gross Merchandise Volume (GMV), 39% YoY growth in revenue, and 25% YoY growth in Gross Profit (which they refer to as “revenue less transaction costs”). The company’s management also guided for 32-42% GMV growth, 25-32% revenue growth, and 30-38% gross profit growth in the fiscal year 2023 (Q3 2022 - Q2 2023). I will post the full earnings review in early September.

✔️ Affirm Reports Fourth Quarter and Fiscal Year 2022 Results✔️ Affirm CEO on shares, guidance and Peloton-Amazon deal✔️ Affirm Stock’s Decline Could ‘Abate’ Soon. Buy on the Weakness, Analysts Say.

dLocal reported 67% YoY growth in Total Payment Volume (TPV), 72% YoY growth in revenue, and 47% YoY growth in gross profit. Oh, and don’t forget, dLocal is one of those rare fintech companies that are profitable on both an adjusted and non-adjusted basis. Thus, the company reported $30.7 million in profit, which was up 73% compared to Q2 2022. I will post the full earnings review in mid-September.✔️ dLocal Limited Reports 2022 Second Quarter Financial Results✔️ Uruguay’s dLocal Sees Revenues Soar in Second Quarter✔️ Uruguay's dLocal posts 74% jump in Q2 net profit as platform grows

Coinbase CEO gives an interview to CNBC

This has been a difficult year for Coinbase ( ), as the “crypto winter” settled in. The company reported a 53% YoY decline in trading volume, a 46% YoY decline in assets on the platform, a 60% YoY decline in revenue, and posted a Net Loss of $1.1 billion in its latest reporting quarter (down from a Net Income of $0.4 billion in Q2 2021). The company’s stock is down 79.7% since the IPO.

Naturally, the company’s CEO and co-founder, Brian Armstrong, wanted to address investors’ concerns and gave a 30-minute interview to CNBC. Brian spoke about crypto market cycles, potential further cost cuts (the company laid off 18% of its workforce in June, 2022), as well as the company’s ambition to diversify its revenue and increase the share of subscription services to 50% of income. If you are an investor, I believe it is worth watching the full interview (link below).✔️ Coinbase CEO Brian Armstrong expects crypto bear market to last 12-18 months, plans to continue cost cuts✔️ Coinbase CEO Brian Armstrong reveals new details about pivot to subscriptions✔️ Watch CNBC’s full interview with Coinbase CEO Brian Armstrong

In other news

✔️ As Crypto Slumps, Goldman Sachs Aims for a Wall Street Built on Blockchain✔️ Fintech CFOs Seek Reliable Funding as Investors Pull Back, Demand Higher Yields✔️ Buy-Now-Pay-Later Tech Pioneers Squeezed as Big Banks Muscle In✔️ Payment for Order Flow Worries the SEC. Perhaps It Shouldn’t, Study Indicates.✔️ Square Sellers across the UK Can Now Offer Buy Now, Pay Later Through Clearpay

Disclosure & Disclaimer: despite rocky performance in 2021 and the first half of 2022, I have open positions in most of the companies write about in this newsletter, as I am extremely bullish on the transformation in the financial services industry. However, none of the above is financial advice, and you should do your research.