Freetrade Posts A 65% In Valuation To £225 Million

Financial technology companies have witnessed a significant downturn and a market slowdown. Freetrade is among the affected companies, with its valuation dropping by 65%. The company has revised its valuation to £225 million as it anticipates a crowdfunding campaign.

Freetrade records a 65% decline in valuation

The new valuation of the company amid the crowdfunding campaign is a notable drop from the £650M that was reached in November 2021. The plunge reflects the current market conditions as tech companies respond to the high-interest rates by central banks globally.

Freetrade is not the only fintech that has been affected by the plunging values across the fintech space. US-based retail trading platform Robinhood has also seen a drop in valuation, with the exchange’s stock dropping by 70% since its IPO in July 2021.

Consumer trading and finance apps achieved much popularity during the Covid-19 lockdown. During the lockdown period, people with extra funds sought to spend and invest these funds while at home. However, since the pandemic ended, there has been growing interest in trading apps.

Freetrade has become increasingly popular for providing commission-free trading. This platform has raised more than £10 million to date. It has £1.4 billion worth of assets under its management, and it has around 700,000 customers.

Freetrade has suffered several setbacks over the years. One of these setbacks involves a loss of £3.3 million during the first quarter of 2023, with the revenues coming to £4.7 million. The firm has since introduced several measures to reduce costs, including announcing redundancies.

“We’ve seen the longest bull market in history come to an end, and valuations of public companies fall. Freetrade is no different. We’re now operating in a different market environment where we need to prioritize profitability. We’ve arrived at a valuation for this round in line with the declines in valuation we’ve seen with public market peers,” said the CEO of Freetrade, Adam Dodds.

Fintechs see a notable drop in valuations

Fintechs have been reporting a significant drop in their valuations. Many startups and companies that target retail investors have faced negative market conditions because of the interest rate hikes that have slowed down inflation.

In December last year, the Checkout.com platform dropped its valuation to $11 billion from $40 billion. The 70% drop in valuation was attributed to macroeconomic conditions. Checkout.com also dropped the price at which employees could exercise their stock options.

Stripe is one of the largest financial infrastructure companies, and it has also seen a drop in valuation. Stripe raised $6.5 billion in a Series I funding round with a valuation of $50 billion. However, two years ago, Stripe had a valuation of $95 billion.

Revolut has also seen a significant drop after one of its major shareholders dropped the valuation of the company by $15 billion in April. The adjustment brought the valuation of the company to $17.7 billion, which was a notable plunge from the $33 billion valuation at a July 2021 funding round.