4 min read

Fintech Newsletter for 5/22/21

U.S retail companies announce earnings (Walmart,Target and Home Depot). more about the bitcoin crash this week.
Fintech Newsletter for 5/22/21

Below is news related to the fintech industry this week.

General News

U.S retail companies announce earnings.(WalMart,Target,HomeDepot)

Target(TGT) reported $24.2B revenue with 23.4% YoY growth and a net income of $2.1B with 639.8% YoY growth.Target reported the strong YoY growth of 60% in the apparel business, and online sales jumped 50% from last quarter, and its stores fulfilled more than 95% of first-quarter sales.

Walmart(WMT) reported $138.3B revenue with 2.7%YoY growth and a net income of $2.7B with a decline in YoY growth. In addition, Walmart reported an increase of 37% in its U.S e-commerce business.

Home(HD) reported $37.5B revenue with 32.7% YoY growth and a net income of $4.15B with 84% YoY growth. Sales through digital channels increased 27% YoY.

In-Home depot earnings call, one of their execs gave an example to highlight the increase in prices and inflation scare. (read our last week's newsletter to learn about the fear of inflation in current economic times)

This was another record-setting quarter for lumber prices. Let me give you an example of what that means for one of our core lumber SKUs. At the end of the first quarter last year, a sheet of seven-sixteenths OSB was approximately $9.55. As we exited the first quarter this year, that same sheet of OSB more than quadrupled in price to $39.76. Inflation from core commodity categories positively impacted our average ticket growth by approximately 375 basis points during the first quarter. Ted Decker -- Chief Operating Officer, Home Depot.

To sum it up, retailers saw a good quarter with increased consumer spending, driven by government stimulus checks (as noted in Walmarts quarterly earnings call).

Due to ease of lockdown and increased vaccination drive, the pent-up demand will most likely continue this trend for the rest of the year. In addition, the retailer's investment in digital channels has paid off, the growth in digital sales is demonstrating this fact.

Hopefully, the inflation scare is just transitory and will not curtail or delay the post covid economic recovery.

Cryptocurrencies take a tumble.

The volatility of cryptocurrencies was very evident this Wednesday, with cryptocurrencies losing 12+% in a day. Bitcoin, one of the leading cryptocurrencies in the market, was trading around $5,000 during March of last year. The price peaked at around $63,000 during April of this year. That's a whopping 1160% growth in a year. However, since then it has lost about 40%.
Much of the initial increase was due to many new investors jumping into the cryptocurrency bandwagon and increasing the demand.
The celebrity endorsements and purchase of bitcoins by tech companies into their portfolio further fueled the demand.

China effect for the downfall


All the cryptocurrencies got a significant setback this week. Three Chinese state bank agencies, the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China, issued a statement saying that its members must not accept or provide services using cryptocurrencies.

Energy consumption.

The way bitcoin is structured, there can't be more than 21M bitcoins present in the system to mine new bitcoins that require computational power.

Even though the bitcoin transactions are anonymous, all the transactions tied to the bitcoin "address" can be verified and recorded in a distributed blockchain ledger. However, there is an estimated 300K confirmed transactions per day, and all this transaction validation requires computing power.

China is the world's most prominent cryptocurrency mining and transaction validation location and provides 65% of the bitcoin hash rate. A measure used to verify transactions and mine new tokens.  Non-renewable energy sources such as coal give the energy needed for computation. Tesla earlier this month announced that it would no longer accept Bitcoin as a payment method to purchase new cars due to environmental concerns surrounding bitcoin mining.

Cryptocurrency volatility is here to stay. Until real assets back, the cryptocurrency and enforcement of more regional regulations are in place.

Fintech New Venture and IPO

  • Found,a San Francisco based banking and tax platform for self-employed ,raised $12.8m in series A funding.
  • Lithic,a New York based developer of virtual debit cards ,raised $43m in Series B funding.
"We built all these foundational card processing tools for ourselves to power Privacy.com. Then we found that other companies, especially developers, needed the same types of tools. The more we thought about it, the more it made sense to give these tools their own name—Lithic. Its own business, with its own separate customers and its own mission” Bo Jiang, CEO and co-founder of Lithic.
  • Figure,a San Francisco based consumer lending and blockchain platform,raised $200m in funding.
  • Settle, a San Francisco based provider of cash flow management solutions ,raised $15m in Series A funding.
  • Vise,a New York based investment portfolio management platform,raised $65m in Series C funding.
  • Pipe,a Miami based B2B financing platform for SaaS companies ,raised $100m in venture funding.
“When Pipe first went to market, we were focused on servicing our first vertical SaaS, but now over 25% of the companies on the platform are in non-SaaS verticals such as telecoms, streaming services, direct to consumer subscription products and even unique verticals like venture capital fund admin and management fees, and sports teams trading their player transfer fees. These companies range from early-stage and bootstrapped companies with $1-200k in revenues all the way to publicly traded companies,” Harry Hurst- Co-CEO PIPE
  • DailyPay,a New York employees and contractors wage access platform ,raised $175m.
  • Jerry,a California based online car insurance brokerage , raised $28m in Series B funding.
  • Rally,a New York based alternative assets platform for retail investors,raised $30m in Series B funding.
  • Merge, a San Francisco based B2B API integrations platform ,raised $4.5m in Seed funding.
  • Extend, a San Francisco based provider of extended warranty plans ,raised $260m in Series C funding.

If you have any comments or have any topic requests for the blog, please leave your feedback here.