Uncle Sean's Update - 6/11/21

Happy Friday!!!
 
Here is the Uncle Sean Update for 6/11/21:

• Even though credit card loan balances are down (as well as CC utilization rates and percent usage of available balance), we are seeing the nations largest CC issuers placing bets that this was a temporary Covid trend; and are pushing out promo’s as the economy reopens and consumers return to travel, leisure, and hospitality industries.  Here are some of the leading headlines from just this week:
  • Wells Fargo announcing the launch of their Active Cash credit card with 2% cash rewards including $0 annual fee and 0% intro for 15 months.
  • Citigroup fired back with the launch of their Custom Cash credit card with up to 5% cash back on eligible top-spend categories up to the first $500 each month, and 1% on all other purchases.  Also includes a $0 annual fee and 0% intro for 15 months.
  • Amex and Synchrony are among the bidders attempting to replace JPMorgan as the issuer of Amazon's co-branded credit card with a portfolio that is just north of $15B in loans.

 

• CNBC had a great interview (7 min video) with SEC Chair, Gary Gensler where he states that rules need to be updated for 2021 technology.  Specifically:
  • Digging into Payment for Order Flow (Robinhood was mentioned) and the meme stock frenzy (Reddit, Gamestop, and Robinhood were all specifically mentioned)
  • Gamification of trading – specifically via mobile apps (hmmm – who comes to mind here???  Thinking it starts with a Robin and ends with a Hood - LOL)
    • Oh – and somewhat coincidentally (yeah right), Robinhood has reportedly delayed their IPO again this week until sometime in July.  No press is bad press???  Well….

 

• El Salvador becomes the first country to adopt bitcoin as legal tender through a partnership with Strike (digital wallet company) to build out the digital infrastructure.  Keep in mind that El Salvador is the smallest country in Central America (smaller in size than Massachusetts) and has an annual GDP of $27B in 2019.  in context to US States, Vermont has the lowest annual GDP in the US for 2020 of $32.8B and California has about $3.1T GDP (as provided per Statista).  Nonetheless, this will be interesting to watch as El Salvador also has an enormous 70% unbanked adult population.

 

• Here cometh the Taxman….  The IRS is seeking a $32M budget for crypto tax enforcement with specific allocations of $3.34 million for IT specialists, $6 million for hardware and software, and $23 million for contractual services.  As part of the new plan, they are seeking the services of external experts in the field of blockchain, cryptocurrencies, and cybercrime; and plans to build an internal dashboard for cryptocurrency and blockchain analytics called STRIKES.

 

• Check out the Mass Fintech Hub launched by the Massachusetts Fintech Working Group and operated by FinTech Sandbox.  Mass Fintech Hub is a public-private partnership “dedicated to making the Commonwealth a global leader in Fintech” -  Crowdfund Insider has a good writeup here.

 

• Dave is the latest fintech to go public via SPAC merger with VPC Impact Acquisition Holdings III, Inc. at a $4B valuation that includes approximately $375M in cash.  Check out the Investor Deck showing 2020 revenue of only $122M, but a forecasted 95% CAGR through 2023 – DANG that’s stout!!!!  Also reflected is incredible customer growth in the Dave Banking platform from 633K at Dec 2020 to 1.3M customers at May 2021.

 

• Marqeta (Nasdaq: MQ) began trading this week.  The IPO was priced at $27 late Tuesday (raising $1.2B), well above the $20 - $24 expected range per the S-1, before opening at $32.50 on Wednesday and closing at 30.52 creating a market cap in excess of $17B in their debut.  It’s nice to see an IPO finally priced correctly.  CNBC has a good video interview (5 min) with Marqeta CEO Jason Gardner on going public.

 

• Here is another cool fintech – take a look at newly launched Save and their Save Debit Invest Card (SIPC spin on debit rewards).  They match your spend dollar for dollar in a portfolio that aligns with your investment profile (stocks, bonds, or other assets).  Customers don't keep the investments, but they do keep all the returns (minus the Save investment advisory fee of 0.59%) in the form of debit rewards.  Returns are not guaranteed of course, but currently stating 2.99% average return (hypothetical back-tested returns from 2006) which beats any other debit or credit rewards platform.  They also announced this week that they have made the first matching investments on behalf of customers debit card spend. 

 

• And the funding keeps pouring in:
  • Reported as rumor two weeks ago, Klarna has officially raised $639M in equity funding from SoftBank giving them a “Holy $hit” valuation of $45.6B.  Whoo-Ahh!!!!  This makes them the largest fintech (by valuation) in all of Europe and the second in the entire World (behind Stripe).  Klarna posted record annual revenue of $1.2 billion (USD) in 2020. However, losses also climbed 50% to about $109.2 million (USD) due to increased costs associated with its international expansion.  Klarna’s 1Q21 Investor Deck states over 90 million global active users and 2 million transactions a day.  US customer growth has more than doubled YoY to 17M in April 2021.
    • (asking for a friend) So what kind of mythical creature is a 45X Unicorn valuation…????  Is it a Supercorn?  A Godzillacorn?  Maybe a Jurassicorn?  A Googleplexacornicus?  Okay – I’ll stop now…. 😊   
  • Bench (SMB bookkeeping service) raised $60M in Series C funding round and launches Bench Banking with LendingClub Bank.
  • Trulioo (global online identity verification) raised $394M in Series D funding round with a valuation of $1.75B.
  • Airbase (corporate spend mgmt platform) raised $60M in Series B funding with a valuation of $600M.  Airbase is an interesting fintech to me.  They have a corporate card, bill pay, and accounting integration platform that has real-time reporting.  When I hear the term “corporate card”, my brain always reverts to either a business credit card or a business charge card (either way, it is on the credit / lending side of banking).  However, the Airbase Visa is actually a prepaid debit GPR platform issued by Sutton Bank.  Slick!!!
  • Kafene (BNPL targeting subprime market) raised $14M in Series A funding.  In March 2021, Kafene was handling about $2M per month in merchandise volume.  The company plans to use the new funding to “scale its existing lease-to-own financing business nationally, as well as to launch a direct-to-consumer virtual lease card.”
  • Clair (EWA / instant pay platform for full-time employees and gig workers) raised $15M in Series A funding round.  Valuation was not disclosed, but this Series A brings their total funding to date to $19.5M ($4.5M seed round last October). 
  • Blooma (CRE digital underwriting platform) raised $15M in Series A funding round.  Per the press release, lenders on the Blooma platform “have reduced loan origination time by up to 75%, enabled 50% more transactions and achieved 4x reductions in origination and servicing costs. To date, the platform has analyzed over $12 billion in deals in the last 12 months and serves multiple commercial banks, private banks and brokers.”  Pretty cool!!!
  • Credit Sesame (PFM and credit builder app) raised $51M in growth capital as their Sesame Cash debit account surpasses 1M customers in less than a year from beta.

 
 
Random Uncle Sean Stuff:

• Holy Cow – It’s HOT here in the Texas Hill Country!!!  I see a San Marcos River tubing trip in the near future (with a subsequent obligatory visit to Herbert’s Taco Hut of course)!  Ahhhh, just thinking of it makes Uncle Sean happy.
• Due to popular demand - Dad Jokes are back:
  • The first 5 days after the weekend are always the hardest.
  • Why is it so difficult to eat a clock?  Because it’s time consuming….
  • Aunt Patty asked me why there was a pile of clothes in the floor next to the laundry basket….  Apparently, “I struck down a Jedi” was not a good answer.
  • I watched a documentary about hydroelectricity last night….  Best Dam movie I’ve seen in a while….  It was Shocking….  It’s a Current documentary….  It Generated a lot of interest…
  • When I was young I was poor, but after decades of hard work, I am no longer young.
  • It was a sad and disappointing day when I discovered my Universal Remote Control did not, in fact, control the universe….  Not even remotely.
  • I got laser eye surgery about a month ago but I still can’t shoot lasers out of my eyes.  Am I doing it wrong or should I ask for a refund?
  • And last but not least…..  What do attorneys wear to work?  Law suits!

 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.
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