FINTECH

The Fintech Dumpster Fire Is Finally Flaming Out. Here’s What’s Emerging From The Ashes.

It’s not a glitch in the matrix, fintech’s charm on Wall Street has truly faded. Fintech was one of the hottest categories of the pandemic, with stocks of companies like Block ($SQ) and Affirm ($AFRM) more than doubling in 2021 — before rising interest rates sent the industry spiraling down. Venture capital funding for new fintech startups dropped sharply by 32% in 2022 and another 42% in 2023. Publicly traded fintech names, once soaring with high-flying valuations, are now being taken to the doghouse.

Paying the price: According to This Week in Fintech’s Jevgenijs Kazanins, most fintech firms had a strong first quarter — expanding into new markets, delivering new products, and achieving record profits — but many struggled to convert these gains into growth (or returns). The F-Prime Fintech Index reports a 13.2% decline year-to-date (YTD) for publicly traded fintech stocks — contrasting with the Nasdaq-100’s ($QQQ) 18% rally over the same period.

• Several leading firms, including Shopify ($SHOP), slumped in the first quarter after forecasting a weaker outlook for the year — followed by others like Wise, Upstart ($UPST), and Expensify ($EXFY).

• Fintech companies’ forecasts were “not enough to meet analysts’ expectations,” especially with high interest rates affecting market dynamics (TWIF).

What Happens When You’re At Rock Bottom?

Some fintech companies have produced impressive returns from strong earnings and growth despite these industry-wide setbacks. According to Kazanins, at least 11 fintech firms have outperformed the Nasdaq this year — and among them are some of the best-performing stocks on Wall Street.

• Digital bank Dave ($DAVE) has grown its user base to nearly 11M, achieving a 25% revenue increase year-over-year — and its stock has surged by 371%.

• Other notable performers include brokerage Robinhood ($HOOD), neobank Nubank ($NU), and payment firm Paysafe ($PSFE), showing impressive returns of 74%, 42%, and 41% YTD, respectively.

Timing the bottom: Executives and venture capitalists believe the worst is now behind the fintech sector. Experts at the Money20/20 event anticipate that valuations have stabilized. And with US stocks at record highs, that might soon clear the way for fintech giants like Stripe, Plaid, and Apex Securities to pay a long-overdue visit to Wall Street.

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LARGECAP RECAP

🗳️ Musk’s Tesla Pay Package and Texas Transition Gets Green Light

Where there’s a will, Musk finds a way. On Thursday, Tesla ($TSLA) shareholders re-approved Musk’s $56B pay package — despite facing challenges from a Delaware judge who overturned the record pay package last month, alleging Musk had a disproportionate role in creating i.

• Retail investors helped hand Musk his package, outvoting influential proxy firms like Glass Lewis and institutional shareholders such as CalPERS, who opposed the “excessive” package.

• Musk celebrated the approval on social media platform X, noting it passed by “wide margins”, which sent $TSLA soaring over 3%.

Everything’s bigger in Texas: Elon scored two additional victories alongside his comp package. Shareholders also approved the company’s move to reincorporate in Texas, shifting from business-centric Delaware. This strategic move could help blunt future challenges to Musk’s pay package. Furthermore, retail investors retained boardroom allies like Kimbal Musk, cementing Musk’s continued influence over the firm. It's safe to say, he (and retail investors) ran away with this one.

Don’t get caught off guard: Global central banks have been studying the implications of CBDCs (Central Bank Digital Currencies), including how they might impact the financial system, monetary policy, and financial stability. Protect yourself with: This 100% Free Wealth Kit →*

Markets & Economy

Life-threatening floods across South Florida: Up to 12 inches of torrential rainfall has plunged Florida into an emergency. Widespread disruptions impact the region as they brace for more flash flooding on Thursday and Friday. [Read]

Wholesale prices unexpectedly fall: The producer price index (PPI) dropped 0.2% in May — despite expectations for a 0.1% increase. This indicates that food producer costs are pulling back, suggesting inflation is easing. [Read]

Meta ($META) VP layoffs: Zuckerberg plans to reduce the number of vice presidents from ~300 to 250, continuing “Meta’s Year of Efficiency” from 2023. [Read]

Business & Wealth

Health insurers seek control of healthcare system: As companies like UnitedHealth Group ($UNH) expand beyond insurance to acquire a vast array of health services companies, potential conflicts of interest arise, prompting concerns about the impact on patients, doctors, and the cost of care. [Read]

US travelers can now renew passports online: Eligible travelers can process applications without mailing documents. Passports arrive in six to eight weeks despite a limited number of daily slots. [Read]

Sony Pictures ($SONY) acquires struggling cinema chain: In a historic move, Sony becomes the first major Hollywood studio to own a theater chain in over 70 years. This follows the Justice Department’s 2020 decision to rescind antitrust laws to prevent control over movie production and distribution. [Read]

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DIGIT OF THE DAY

America’s Health Care Bill Is Expected To Balloon 60% By 2032

They say laughter is the best medicine, and given the soaring health costs, it might soon be the only affordable one. National health spending is on track to hit $7.7T by 2032, making up ~20% of our GDP. This surge is fueled by increasing demand for care, more insured people, and new Medicare enrollees. The end of COVID-19 measures has led to more doctor and hospital visits, pushing costs even higher.

• In 2023, national health expenditures reached $4.8T — growing 7.5% year-over-year, three times faster than GDP.

• In 2024, Health Affairs projects slower growth rates: 5.2% for national health expenditures (i.e., Medicare and Medicaid) and 5.3% for personal health expenditures (i.e., doctor visits and prescription costs).

Do we need to sell our organs to cover the bill? Fortunately, no. While the last of the baby boomers will push Medicare spending up over the next decade, relief is on the horizon. Starting in 2026, the Inflation Reduction Act will introduce significant reforms, including a cap on out-of-pocket expenses and better drug price negotiations. This should stabilize or even reduce Medicare expenses over time, but Americans with private insurance are still likely to face higher prices.