After all, they are operating in a much different environment than in years past. In their hypergrowth stage, fintechs had access to capital that forex trading 24 hours allowed them to be bold in their business strategy. They could make revenue generation their foremost objective; profits were expected to follow.

  1. However, it’s the Mercado Pago payments platform that is most exciting from a fintech perspective.
  2. Valuing private tech startups is a difficult task as they aren’t subject to the same transparency and financial disclosure regulations publicly traded companies are.
  3. On the downside, the company has doubled its long-term debt balance since 2019 to $10 billion as of December, 2022.
  4. It currently has 1.2 billion customers worldwide (¾ of whom are in China) and aims to grow to 2 billion over the next decade.

There’s no question that the fintech sector is growing rapidly and that the space has some exciting investment opportunities. Investors are attracted to ETFs, fintech-focused and otherwise, because they enable you to put your money to work in a basket of stocks with just a single investment. You can also consider reviewing the principles of growth stock investing before you choose which fintech stocks to buy. Many fintech stocks might seem expensive, especially those that aren’t yet consistently profitable.

Assessing a firm’s total addressable market (TAM) helps gauge a fintech’s potential future revenue. Business loan providers such as Kabbage, Lendio, Accion, and Funding Circle (among others) offer startup and established businesses easy, fast platforms to secure working capital. Oscar, an online insurance startup, received $165 million in funding in March 2018.

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Thus, while Block has been profitable on an adjusted basis, GAAP profitability is what’s critical because it shows the true state of a business. Block has a Strong Buy consensus rating based on 26 Buys, six Holds, and zero Sell ratings assigned over the last three months. At $79.76, the average Block stock price target implies upside potential of 16.9%. Unfortunately, Block’s Bitcoin diversion is triggering extreme movements in its financial results, which is a tough pill for many investors to swallow.

Plus, Adyen is highly profitable, with a 59% EBITDA margin that could get even better as the business scales. Some bankers and entrepreneurs think Chime has enough money and doesn’t need to go public. The firm last year generated $1 billion in revenue and as of last March had $900 million in cash, a person familiar with the situation told Fortune. The analysts’ current consensus full-year FY 2023 operating revenue and normalized net profit estimates for LX are RMB12,582 million and RMB1,469 million, respectively as per S&P Capital IQ data.

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But in the long term, fintechs continue to gain in strength and relevance for customers and the economy. In each of the seven largest European economies, as measured by GDP, at least one fintech ranks among the top five banking institutions. Keep up with earnings reports and press releases from your fintech stocks. Listen to management’s commentary on performance and read what analysts are saying.

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Investment apps may charge brokerage fees, utilize payment for order flow (PFOF), or collect a percentage of assets under management (AUM). Payment apps may earn interest on cash amounts and charge for features like earlier withdrawals or credit card use. If you want to assess how important the fintech industry is, follow the money. Huge investments by banks and a growing pile of cash being poured into fintech startups.

On the other hand, innovation activities also depend on country-level financial development (Xiao and Zhao, 2012; Zhu et al., 2020), where too much finance may have a detrimental effect on growth. While fintech penetration in emerging markets is already the highest in the world, its growth potential is underscored by a few trends. Many of these economies lack access to traditional banking services and have a high share of underbanked population. Using traditional valuation metrics, such as the price-to-earnings ratio (P/E ratio) or price-to-sales ratio (P/S ratio), can make analyzing fintech stocks difficult.

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The company’s stocks performed well during the pandemic since the online-only bank nature of its business helped customers stuck at their homes. The firm is aiming to replicate its success in the auto industry with expansion plans into the mortgage market to meet growth targets. Ally Financial is one of the best performing fintech stocks to buy for 2021 as it is expected to give handsome returns to investors. Technological advances have reshaped the financial services field to fulfill the needs of the current generation with the objectives of effectively providing equal access to financial systems and enhancing financial capability. A stable developed financial market coupled with evolvement from technological innovation could shape the new financial ecosystem to enhance financial inclusivity.

As for recent financial performance, MA topped analysts’ expectations for the second quarter of 2022, as a strong rebound in travel helped drive a 58% rise in cross-border transaction volumes. Per the company’s earnings call, cross-border travel reached 118% of 2019 levels in the second quarter. Per the World Bank, about 67% of adults worldwide now make or receive a digital payment.

It is paramount to grow your customer base, but many fintech businesses actually have no idea how to take it from there. This is especially true in retail banking where many apps are going after the same customers. They all offer slick customer experience and a friendly user interface.


PayPal has 432 million active accounts in more than 200 countries around the world. While user growth has slowed down a bit lately, PayPal is doing a great job of figuring out how to increase monetization of its user base and still has massive long-term potential. In a nutshell, this is a highly profitable industry leader, and there’s no reason to believe that will change anytime soon. Many fintech stocks have been hit hard in the recent stock market downturn. Growth stocks in general have taken the worst of the decline, and most fintechs fit into this category. He is the author of the investing group Asia Value & Moat Stocks, providing ideas for value investors seeking investment opportunities listed in Asia, with a particular focus on the Hong Kong market.

Since the internet revolution, financial technology has grown explosively. In the U.S., fintech companies must comply with consumer protection and data privacy laws enforced by the Consumer Financial Protection Bureau, the Federal Trade Commission and the Department of Justice. Some fintech companies may also be subject to the Bank Secrecy Act/Anti-Money Laundering regulations enforced by the Financial Crimes Enforcement Network and the U.S.

Consumers, however, tend to have low loyalty, and be sensitive to design and experience initially, but then be swayed by price and convenience. In this section, we will cover the taxonomy of emerging categories, adding some insights and examples to each category and some fintech trends. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. This form of ledger technology is what’s behind cryptocurrencies and other tech trends. One venture executive told Fortune that they weren’t surprised to see such a drop in Chime’s value, to about $6 billion. “That valuation seems more reasonable than their other one,” they said.

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