Why An Unsustainable Bubble Is Growing Inside Fintech

Added: 2026-05-13

[00:00:00]Today on Forbes, why an unsustainable bubble is growing inside [music] fintech. The financial technology industry has become a world of halves and have nots. Take San Francisco payments company Stripe, which helps millions of merchants accept credit cards, process [music] stable coin transactions, and manage billing tasks.

[00:00:20]In 2025, [music] it bought in $6.9 billion of net revenue and $1.2 $2 billion of earnings before factoring in [music] interest, tax, depreciation, and amortization expenses. Revenues were up more than 30% from 2024. That's worldclass scale and growth. But its recent valuation of $159 billion means its private backers think it's worth nearly five times Adyen, a publicly traded Dutch fintech and close competitor. Adyen [music] processed $1.9 trillion in payments last year compared with Stripe's 1.9 trillion. Stripe loyalists point out it has more business lines and is growing faster off a larger base, but the chances it could maintain a $159 billion valuation if it went public today are slim. New York-based corporate card company Ramp is another so-called quote have that carries a headscratching price tag. In September 2025, it announced $1 billion in annualized gross revenue and two months later fetched a $32 billion valuation.

[00:01:31]But its gross sales figure doesn't subtract out interchange [music] fees and rewards given back to banks, partners, and customers. That means its net revenue is likely at least 40% lower, putting its valuation multiple around 50 or higher, which is reminiscent of FinTech 2021 bubble days.

[00:01:50]Ramp says it's growing by more than 100% annually and is cash flow positive.

[00:01:55]Ramp's rival Brex had 30% less revenue as of September 2025 and in January 2026 was valued at 5.15 billion when [music] Capital 1 announced it would acquire it.

[00:02:08]Even with its growth, is ramp worth 6 [music] times Brex? Michael Gilroy, a former general partner at CO2 and founding partner of venture capital Shop Marathon, says the valuations for top private fintex quote are beyond nonsensical, not even in the zip code of what they trade at as public companies.

[00:02:28]According to Capite, the collective market value of the top 10 largest private fintech has jumped 164% over the past 12 months compared with a 2% rise for the [music] top 10 publicly traded FinTechs. In many ways, this reflects a broader shift towards private capital markets. There are now thousands of private equity firms and venture capitalists competing for deals, driving up valuations, especially in red-hot areas like artificial intelligence.

[00:02:57]Meanwhile, most fintech [music] that have gone public recently have seen their stocks stagnate or slump. Digital bank Chime, once valued at $25 billion during FinTech [music] 2021 peak, went public in June of 2025 and has since traded at a market cap between 7 billion and 11 billion. Of the 11 fintexs that went public last year, only three are trading above their IPO price, according to Rosio Wu, a partner at VC firm F-Prime Capital. One force driving the rise of fintex halves is their skillfully crafted narratives around AI. Stripe and ramp have convinced investors that the AI wave will boost their business, promoting AI agents and AIcentric features. Clara, the publicly traded buy now pay later company based [music] in Stockholm, has tried the same with CEO Sebastian Simeatowski saying the company is already using AI to replace enterprise software from Salesforce. Public investors, however, have remained skeptical. CLA now trades at a $6 billion market value, far below its 2021 private valuation of $46 [music] billion. As AI dominates the investment narrative, a stampede of private capital is chasing a shrinking number of companies deemed winners of the AI revolution. Big institutional investors want to hitch a ride on the next Meta or Google. So, sovereign wealth and pension funds are investing directly in companies like OpenAI and Stripe, driving valuations higher. According to Annie Lamont, co-founder and managing partner of VC firm Oakhft, the implications are clear. IPOs will likely become rarer and public market investors [music] will have fewer chances to participate in tech wealth creation. There's also the risk of a valuation reckoning if the AI bubble deflates. As Annie Lamont of Oak HCFT puts it, there is quote a suspension of disbelief. It's a bit of a blind box that they're investing in. For full coverage, check out Jeff Coughlin's piece on Forbes.com. This is John Palmer from Forbes. [music] Thanks for tuning in.