How is the Fintech IPO landscape looking for 2022?

Fintech stocks worldwide have been booming to record-breaking highs this year due to the Covid-19 pandemic and growing positive sentiments surrounding the swift recovery of global stock markets following a worrying start to spring 2020. 

However, this is not the same story for Europe as it remains dry on the relative initial public offering (IPO) stage. In 2020, only 16 tech company IPOs took place, making it the lowest in more than a decade. But things looked more promising as lockdowns slowly lifted in 2021, and with sights set on 2022, there's bound to be more opportunities as the continent’s initial public offering market wakes up.

(Image: Reuters)

IPOs have been in high demand in recent months as many private businesses search for the opportunity to cash in on the ever-popular technology bubble. As a result, the tech market has seen valuations soar beyond expectations. 

Research conducted by FactSet found that in the US, there were more than 160 IPOs in the fourth quarter of 2020, generating over an astonishing $53 billion. In addition, worldwide, there were 494 IPOs in 2020, doubling 2019 figures and raising a combined total of $174 billion. With this in mind, let's take a look at what's on the horizon for fintech IPOs in 2022:

Hotly Anticipated IPOs of 2022

2022 could see several highly anticipated IPOs come to market. This includes online grocery businesses, delivery services, financial tech companies and electric vehicle organisations. Historically, the highest demanding IPO shares can be challenging to attain before a stock begins trading and so it's wise and essential to get in there early.

If it’s hard to get your hands on pre-IPO shares, then there is still a chance to profit from them by acquiring them for long term investment after the IPO, which can work well for investors looking to grow the assets over more extended periods. Here is a look at some of the ones to watch for 2022:

Stripe 

Stripe is a financial technology company that specialises in developing payment processing platforms. These include application programming interfaces (APIs) which include software as a service (SaaS). These packages enable digital payments, which is regarded as the future of payment owing to the Covid-19 pandemic accelerating the transition towards cashless banking. 

The company model, which includes APIs that allow web and mobile app developers to integrate payments for both sending and receiving, is adaptable for all everyday business operations and is attractive and highly sought after. 

Stripe has over 1 million customers, ranging from small startups to large firms, which has dynamically changed markets and the way we live today through innovation - and includes a portfolio of esteemed customers like Amazon and Shopify. 

Chime

As of 2020, Chime has more than 8 million customers and is an online financial app designed to help young adults to manage their finances. It is a fintech organisation, making it far from a traditional banking institution. 

The app allows customers to carry out financial activities via the app or on their desktops and act as a middleman between the customer and The Bancorp Bank, which is the service provider. Each customer receives a debit card which allows them to spend the funds. Chime makes money on the interchange fees each time the customer swipes their debit card to make a payment.

(Chime cracks the 8 million account milestone: Business Insider)

A recent report claimed that Chime, as of August 2021, is valued at $25 billion thanks to its latest fundraising efforts which saw it bring in $750 million. This valuation makes it one of the most valuable companies circulating the fintech landscape. With this in mind, the IPO is now estimated to take place in the first quarter of 2022

Plaid

Plaid is a fintech organisation that focuses on enabling seamless relationships between customers and financial intermediaries, developers, and various other fintech apps to create better connections for the financial tech world. 

Plaid has built up the ability to build APIs for the financial industry, including lending, banking, and investing services. However, going far beyond APIs, Paid is also focusing on becoming a data analytics platform that has the ability to provide its customers with high levels of insight and data, giving them the leverage they need to make better financial decisions.

The organisation has made itself one of the must-use platforms for fintech companies and is hoping to empower developers, especially at star-up and legacy levels, for a financial incision to aid in delivering a seamless and unique user experience making it easy to use for all parties involved. 

Due to antitrust concerns, Visa drew back its interest in acquiring Plaid in January 2021. However, this has made it one of the most sought after fintech unicorns in the US today.

Acorns 

Acorns is a technology application that can be used for all things financial. It has, over its lifespan, popularised micro-investing, which is a form of frequently making small investments. The main attraction is its ability to round up spending and invest small fractions into ETFs. 

So, for example, if the consumer makes a small purchase at their local coffee shop, a small portion of their spending gets automatically invested into a predetermined portfolio of passive index ETFs.

Acorns have gone one step further and have partnered with CNBC to deliver educational features in their app to help consumers with financial wellness. This relationship could help lead it to the IPO stage very soon.