Several financial technology companies decided to revisit their head counts in 2023 in an effort to save costs following a turbulent 2022 for the industry.
A total of 11 select fintech companies in the industry announced layoffs since the beginning of 2023. PayPal Holdings Inc. took the top spot by handing out pink slips to 2,000 full-time employees, which represented nearly 7% of its total global workforce of 29,900.
Coinbase Global Inc. had the second-highest head-count reduction since the beginning of the year. The company announced a reduction of 950 employees out of the 4,510 total employees in the company as of Dec. 31, 2022.
Affirm Holdings Inc. rounded off the top three after it announced 500 layoffs, representing nearly 20% of its total head count.
Management changes
Several fintech companies that announced layoffs in the first quarter have been experiencing personnel changes at the top.
BM Technologies Inc. named Raj Singh as co-CEO. Singh was the former vice chairman of investment banking at Raymond James.
In January, mortgage software company Blend Labs Inc. announced the departure of President Tim Mayopoulos, head of finance Marc Greenberg and head of legal, compliance and risk Crystal Sumner, with a transition period. Their roles were effectively consolidated under Amir Jafari, Blend's new head of finance and administration.
Mayopoulos, the former CEO of Fannie Mae, found his next job in March: leading Silicon Valley Bridge Bank, an entity created by the Federal Deposit Insurance Corp. following its takeover of the failed Silicon Valley Bank.
In February, PayPal President and CEO Dan Schulman announced plans to retire at the end of 2023. Schulman joined PayPal in 2014 when it was spinning off from eBay Inc.
Fintech underperformance
The fintech companies' stocks have underperformed compared to the broader S&P 500. The S&P US Financial Technology index posted a negative 5.5% total return for the past 12 months as of April 21. Meanwhile, the S&P 500's total return during the same time was negative 4.3%.
Blend Labs' stock was the worst-performing in the analysis, with a negative 82.4% return over the past year as of April 21. Year to date, it returned negative 44.1%.
Upstart Holdings Inc. was just behind Blend Labs, as the company's stock had a one-year total return of negative 80.1%. Its year-to-date return was 13.6%.
LendingTree Inc. took the third spot with a one-year total return of negative 74.5%. From Jan. 1 through April 21, its stock return was negative 31.9%.
In addition to the valuation drop across fintech stocks, equity investments into private fintech companies also tightened. In 2022, funding into fintech companies fell by one-third globally to $63 billion, according to 451 Research.
The tightening is likely to worsen in 2023 in the wake of the collapse of Silicon Valley Bank, as investors and startups reassess their risk tolerance and market opportunities, 451 Research analysts wrote.
