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Affirm Card's potential powers stock rally
Affirm Card's potential powers a stock rally, Coinbase takes a stake in USDC issuer Circle, and Solana Pay brings stablecoin payments to Shopify
Hope you had a fantastic weekend! The second quarter earnings season is coming to its close, leaving us with a mixed bag of results. I am looking forward to autumn, but in the meantime, let’s revisit the latest Fintech events from the summer of 2023:
Affirm Card's potential powers a stock rally,
Coinbase takes a stake in USDC issuer Circle, and
Solana Pay brings stablecoin payments to Shopify
Thank you for reading and have a great day!
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Affirm Card's Potential Powers Stock Rally
Shares of BNPL lender Affirm (NASDAQ: AFRM) rallied more than 28% on Friday after the company reported better-than-expected second-quarter (fiscal fourth quarter 2023) results. Thus, Gross Merchandise Volume increased 25% YoY to $5.5 billion, driving a 22% YoY increase in Net revenue. The company reported a Net loss of $206 million; however, managed to deliver on its promise to reach profitability on an adjusted basis posting an Adjusted Operating Income of $14.7 million. Affirm finished the quarter with 16.5 million active consumers and 0.25 million active merchants on the platform, representing 18% YoY and 8% YoY growth respectively.
However, what got the analysts (and presumably) investors excited the most, was the company’s progress with the rollout of Affirm’s Card. Thus, the company reported that it had more than 300,000 active Affirm Card holders as of mid-August, with card transactions delivering similar gross profitability to the rest of Affirm’s business. Affirm’s Card, previously called Debit+, allows consumers to split an in-store payment in multiple installments using Affirm's pre-approved credit limit. Affirm card, primarily meant for in-store purchases, expands the company’s addressable market, as almost 85% of retail spend in the United States happens offline.
Coinbase Takes Stake in USDC Issuer Circle
Cryptocurrency exchange Coinbase (NASDAQ: COIN) is taking a minority stake in Circle, the issuer of the USDC stablecoin, signaling a closer relationship between the two companies. Coinbase and Circle will continue sharing revenue from USDC reserves interest income based on the stablecoin holdings on the Coinbase platform, and will now equally share interest income from wider USDC distribution and usage. USDC, which was launched in 2018, has a market cap of $26 billion and accounts for approximately 21% of the stablecoin market, according to CoinMarketCap. Tether, the largest stablecoin, had a market cap of $82.8 billion as of this writing.
Earlier in August, Coinbase reported that its second-quarter loss narrowed to $97 million, despite a decline in transaction volumes and net revenue. Thus, transaction revenue declined 50% YoY to $327.1 million, however, it was offset by a 28% growth in subscription and service revenue to $335.4 million. The growth in non-transaction revenue was primarily driven by interest income, including the interest generated from USDC reserves. A narrower loss comes on the back of multiple layoffs that the company executed in 2022 and early 2023, which reduced the total operating expenses for the quarter to $781.5 million.
Solana Pay Brings Stablecoin Payments to Shopify
Solana Pay, an open-source, decentralized payment protocol developed on the Solana blockchain, has integrated with Shopify (NYSE: SHOP), providing merchants with access to a new payment option. The integration enables merchants to accept payments in USD stablecoins compatible with the Solana blockchain, and eliminates bank fees, chargebacks, and payment holding times, offering immediate settlement and access to funds. “Solana's high transaction speeds, near-zero fees, and sustainability make it an ideal choice for scaling web3 payments,” states Solana Labs, the developer of Solana, in the press release.
Earlier this month, PayPal (NASDAQ: PYPL) introduced its own stablecoin called PayPal USD (PYUSD), which is backed by deposits and short-term treasuries and can be redeemed 1:1 for U.S. dollars. U.S. PayPal customers can use PYUSD for various purposes, including transferring between PayPal and external wallets, making person-to-person payments, and converting into supported cryptocurrencies. The stablecoin is issued by Paxos Trust Company as an ERC-20 token on the Ethereum blockchain. The decision to use the Ethereum blockchain, which is associated with high transaction fees, is one of the reasons why PayPal’s stablecoin is off to a slow start.
Inter stock (NASDAQ: INTR) is now outperforming Nubank (NYSE: NU) after the company delivered strong second-quarter results. Inter shares are up 88% YTD, while Nubank shares are up 74% YTD.
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Cover image source: Affirm
Disclaimer: Information contained in this newsletter is intended for educational and informational purposes only and should not be considered financial advice. You should do your own research or seek professional advice before making any investment decisions.