Do You Have These Fintech Stocks On Your Radar This Week?
Fintech stocks have had a stellar 2020. Rightfully so, as countless people have come to rely on digital payment solutions throughout their daily lives. Whether it is the average consumer or businesses of varying sizes, fintech offers vital services in these times. Having said that, it’s not surprising that top fintech stocks have been the focus in the stock market over the past year.
If we look at the broader picture, the rapid growth of e-commerce companies has also supported the push toward a cashless society. For instance, we saw how companies like Amazon (NASDAQ: AMZN) or Walmart (NYSE: WMT) benefited tremendously from online spending during the pandemic. And these e-commerce companies require a good working relationship with financial intermediaries. As a result, fintech stocks are well-positioned to benefit immensely. After all, e-commerce’s success is fintech’s success.
Fintech Continues To Expand As People Use Less Cash & Rely Less On Traditional Banks
With digital payments expected to be in the norm in the future, it is not surprising why many investors are bullish on the sector. Many have also parked their money in digital wallets as sending money becomes easier. Of course, the rise of “buy now pay later” (BNPL) services has added another angle to fintech. BNPL services allow customers to purchase goods in installments. You could say they compete with credit cards from traditional banks.
Nevertheless, people will likely continue to rely on fintech in the future. Being able to make payments digitally provides a new dimension of convenience to consumers. Now, with all these companies adapting to the trends of financial technology, are you convinced by the use of technology to improve financial services? If yes, here are three top fintech stocks you may want to consider adding to your portfolio in the stock market today.
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Top Fintech Stocks To Consider Buying Today
- Paysafe Ltd (NYSE: PSFE)
- PayPal Holdings (NASDAQ: PYPL)
- Square Inc. (NYSE: SQ)
PaySafe
Paysafe is a London-based online payments company. Since completing their merger with Foley Trasimene Acquisition II Corp, PSFE stock has been on the downtrend. And that’s expected considering most SPAC stocks lose about a third of their value after completing their mergers according to a study. But there seem to be renewed interests in PSFE stock among investors this week. According to a 13-F filing, David Tepper’s Appaloosa LP added a new position in PSFE stock. Considering Tepper’s investment track record in value and growth companies, it appears investors are taking note of Tepper’s move.
Last week, the company reported its first-quarter financials for 2021 and reaffirmed its 2021 outlook. To start things off, its revenue came in 5% higher year-over-year to $377.4 million. More notably, the company saw 66% of revenue growth in the North American iGaming market. In addition, its total payment volume was $27.7 billion, an increase of 8% compared to the year earlier.
Paysafe benefits from both the rise in fintech and iGaming. And these two sectors are expecting rapid growth in the coming decade. Looking forward, Paysafe projects a CAGR of 11% from fiscal 2020 to 2023. Revenues and EBITDA are projected to reach $1.88 billion and $660 million by 2023, respectively. It is also worth mentioning that the company has notable companies such as Roblox (NYSE: RBLX) and DraftKings (NASDAQ: DKNG) as its clients. With many major clients under its belt and Tepper on board, is now the time for investors to invest in PSFE stock for the long haul?
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PayPal Holdings
PayPal is a digital payments stock that has remained at the forefront of the digital payment revolution for more than 20 years. By leveraging technology to make financial services and commerce more affordable and secure, PayPal’s platform empowers more than 300 million consumers and merchants. PayPal is another company that reported an impressive first-quarter earnings report earlier this month. It is noteworthy that this is the company’s strongest ever first-quarter results in history.
The company posted revenue of $6.03 billion that beat analysts’ expectations. First-quarter net profit rose to $1.10 billion from $84 million a year earlier. Besides, the company added 14.5 million net new active accounts, bringing its total user base to 392 million. It’s also worth noting that over 5 million people have used PayPal’s BNPL service since it launched in August of last year. By encouraging more purchases using PayPal, the BNPL service is becoming an increasingly valuable driver of engagement.
After posting strong earnings, the company also announced plans to roll out a “next-generation digital wallet” in the third quarter. CEO Dan Schulman described the product as an “all-in-one” personalized app that will provide increasingly customized and unique shopping, financial services, and payment experiences. With digital payments being the way forward, would you buy PYPL stock now?
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Square
Square is a financial services, merchant services, and mobile payment company that is based in San Francisco. The fintech giant operates two fintech ecosystems, one of which provides a commerce ecosystem that enables its sellers to start, run, and grow their businesses. But what’s sending Square stock over the roof is its Cash App, a growing segment for the company. This is unsurprising given how at the onset of the pandemic, there has been a steady increase in the adoption of cashless and contactless payments.
If anything, the pandemic had accelerated this shift to digital payments. From its first-quarter earnings, revenue came in a whopping 266% higher to $5.06 billion, largely thanks to gains in Bitcoin revenue. Net income for the quarter was $39 million. Notably, the company’s Cash App gross profit came in 171% higher to $495 million.
Square was a major underperformer among growth stocks this week. That could be due to its plan to offer $2 billion in senior notes in a private placement to institutional investors. Of course, the sharp decline in Bitcoin and the sell-off among tech stocks are putting pressure on SQ stock. Considering the multiple headwinds, many are shying away from the fintech stock for the time being. But like it or not, there’s still a lot of growth left in the tank for these top fintech stocks. That’s assuming we are in it for the long haul. Considering the rising adoption of fintech, will you consider buying SQ stock when it dips?
