FY22 was a lousy period for ASX fintech shares. Here’s why

Financial year 2022 (FY22) was a rough one for ASX financial technology (better known as fintech) shares. Many of the market’s favourites recorded notable tumbles last financial year.

Here’s how some of the most renowned ASX fintech shares performed in FY22:

• Block Inc (ASX: SQ2) fell 49%
• EML Payments Ltd (ASX: EML) fell 64%
• Hub24 Ltd (ASX: HUB) fell 25%
• Netwealth Group Ltd (ASX: NWL) fell 27%
• Tyro Payments Ltd (ASX: TYR) fell 84%

Meanwhile, some ASX buy now, pay later (BNPL) shares, which arguably fall into the category, tumbled more than 90% in FY22.

So, what weighed on ASX fintech shares in FY22? Let’s take a look.

What dragged on ASX fintech shares in FY22?

ASX fintech shares had a rough ride in FY22 as inflation rose and interest rates were hiked.

Those macroeconomic movements can have multiple effects on fintech companies.

Firstly, they increase both their costs of doing business and the cost of debts. Higher inflation and rates also put pressure on consumers, who in turn often reduce spending.

On top of that, rising inflation commonly impacts the valuation of fintechs – and tech stocks in general.

Many tech stocks’ valuations are based on assumed future cash flows. Therefore, inflation and interest rate hikes can pose greater risks to tech stocks.

And of course, some of these tech names pushed through a number of shakeups in FY22.

Most notably was Afterpay’s delisting and Block’s entrance to the ASX. The latter snapped up the former market darling in an all-scrip deal, finalised in early February.

In addition, Hub24 acquired formerly ASX-listed Class. Meantime, the Tyro share price tumbled when its CEO jumped ship in FY22.

The post FY22 was a lousy period for ASX fintech shares. Here’s why appeared first on The Motley Fool Australia.

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More reading

• Is FY23 going to be a winning year for ASX fintech shares?
• $264 million! The 10 highest-paid CEOs on the ASX
• These were the best (and worst) performing ASX 200 sectors of FY22
• Why Costa, Domino’s, EML, and Novonix shares are dropping
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc., EML Payments, Hub24 Ltd, Netwealth, and Tyro Payments. The Motley Fool Australia has positions in and has recommended Block, Inc., EML Payments, Hub24 Ltd, and Netwealth. The Motley Fool Australia has recommended Tyro Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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