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 BlockSQ

and AffirmAFRM

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’sQQQ

18% rally over the same period.

• Several leading firms, including ShopifySHOP
  , slumped in the first quarter after forecasting a weaker outlook for the year — followed by others like Wise, UpstartUPST
  , and ExpensifyEXFY
  .
• 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 this year.

• Digital bank DaveDAVE
  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 RobinhoodHOOD
  , neobank NubankNU
  , and payment firm PaysafePSFE
  , 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.