This Might Be Important: "Is the fintech bubble bursting?"

I haven't paid as much attention to fintech as maybe I should have.
For our purposes it started dropping off the radar a couple years ago when it seemed every little wannabe entrepreneur had dispensed with making the case for what they were doing and how their product/idea/dream would help the end user and those said wannabe entrepreneurs would cut directly to the chase:

"Just give us some money"

We'll get to a couple of the headline takeaways but first here's the FT's Jemima Kelly to give us the lay of the land:

This year, it has felt like hardly a week has passed without some fintech declaring nonchalantly that it’s raised another few hundred million pounds.

On Monday, it was the turn of a little-known (to us anyway) start-up called Hastee, which gives employees access to their pay as they earn it. It announced that it had raised £208m in its latest funding round.

Challenger bank Revolut, meanwhile, is in the process of trying to raise $500m in equity and $1bn via a convertible loan from investors, in a fundraise that could value the company at as much as $10bn. This comes despite the fact that, like many fintechs, the company has never been profitable (apart from a brief period in early 2018 during peak crypto-mania, when Revolut launched crypto trading).

And we’ve lost track of the number of variations there are on the “[Insert City] Fintech Week” theme, but there seem to be very many indeed.

So we must be in the midst of peak fintech-mania, right?

Actually, possibly not. Take a look at this chart, from Ian Green, principal consultant for data and technology at The Disruption House, a firm that provides benchmarking and data analytics to the financial sector:

The chart shows that after a huge increase in the number of fintech start-ups founded between 2004 and 2015, there has since been a rapid decline: from 390 in 2015 to just 71 in 2018....

...MUCH MORE

The fact the bubble was in the number of start-ups rather than price-in-the-public-markets means we may have extended the length of the overall bull market.
Just as all the trade talk sturm und drang dramatically slowed the rate of ascent of the wider market over the last couple years:

FinViz

in effect cutting the top off of extinction event cliff-edge waveforms:

 

A sawtooth wave represented by a successively larger sum of trigonometric terms and smoothing via Brilliant.org

and smoothing/extending the ride.

In hot new areas what you don't want to see is stuff like this:
March 10, 2010
Happy Anniversary Mr. Market: Ten Years Ago Today...

...Internet.com put out this press release:

INTERNET.COM'S ISDEX, THE INTERNET STOCK INDEX, BREAKS 1,000, A GAIN OF 1000% IN LESS THAN FOUR YEARS

(New York, NY-March 10, 2000)-internet.com Corporation's (Nasdaq: INTM) ISDEX(r), the Internet Stock Index (http://www.isdex.com), rose above 1,000 for the first time last week. Since its inception in 1996, ISDEX has posted a 1,012% gain, outpacing the Dow and S&P 500, which have only increased 104% and 120%, respectively, during the same period. The ISDEX has also outpaced these indices for this year, with the ISDEX up 29% and both the Dow and S&P down 13% and 5%, respectively.

"With a gain of more than 29% since January 1 alone, it is clear that Internet stocks continue as one of the overall economy's strongest sectors," said Alan M. Meckler, chairman and CEO of internet.com Corporation....

The Nasdaq closed that Friday at 5048.62, it's all-time high.
On the following Monday the Naz was down 141 points. Tuesday, 200.
The index had begun a 30-month decline to its September 24, 2002 intra-day low of 1,169.04,
down 77%.

This became one of my favorite songs:

The Day the NASDAQ Died

Humble Pie (sung to the tune of American Pie)

A long, long week ago
I can still remember how the market used to make me smile
What I'd do when I had the chance
Is get myself a cash advance
And add another tech stock to the pile.
.

But Alan Greenspan made me shiver
With every speech that he delivered
Bad news on the rate front
Still I'd take one more punt
.

I can't remember if I cried
When I heard about the CPI
I lost my fortune and my pride
The day the NASDAQ died
.

So bye-bye to my piece of the pie
I poured my paycheck into Datek
Now my cash account's dry
It's just two weeks from a new all-time high
And now we're right back where we were in July
We're right back where we were in July.....

Go read Jemima, I'm going to sing the rest of the song.