Fintech stocks soared during the COVID-19 pandemic, with a sharp rise in demand for touchless payments and digital money transfers. Despite this initial success, the fintech sector has faced challenges and has been overshadowed by industries like AI and semiconductors. Additionally, these companies encounter fierce competition from traditional banks and payment brands.
As the world transitions towards a future where financial tasks can be accomplished with a few taps on our smartphones, the significance of fintech in revolutionizing financial services cannot be overstated. Here are three fintech stocks that are reshaping the financial landscape.
Square Inc (SQ)
Square Inc (NYSE:SQ) is an American fintech firm that facilitates online payments and transfers for both merchants and consumers, processing over $228 billion in payments in 2023. Analysts at Yahoo Finance have set a one-year price target for Square Inc stock ranging from $40.00 to $110.00, with an average target of $89.05.
This fintech powerhouse is renowned for its Square payment processor for merchants and the Cash App for mobile payments and transfers. With more than 50 million Cash App users, a majority aged between 18 and 34, Square Inc offers a platform for buying and selling stocks, ETFs, and Bitcoin directly on smartphones. Founder Jack Dorsey’s support for Bitcoin is evident, with Block holding over 8,000 BTC in reserves.
Despite its rapid growth, Square Inc trades at appealing valuations, with a price of around 2.2x sales and 25x forward earnings. Revenue has consistently increased over seven quarters, boasting a five-year compound annual growth rate of 44%. With its current valuation and growth trajectory, Square Inc has the potential to deliver substantial returns in the coming years.
PayPal Holdings Inc (PYPL)
PayPal Holdings Inc (NASDAQ:PYPL) stands as a global leader in online payments, processing over 20 billion transactions in 2023. Originally part of eBay, PayPal was founded by a group that included Elon Musk and Peter Thiel. With a user base exceeding 430 million spread across 200 countries, PayPal reigns as the preferred method for international online money transfers.
Analysts covering PayPal are optimistic, projecting a one-year price target between $56.00 and $120.00, with an average of $69.98. Despite a 15% decline in shares since last March, lagging behind the S&P 500’s 30% returns, PayPal continues to excel in revenue generation. The recent change in CEO in September 2023 has contributed to the stock’s underwhelming performance.
Despite the stock’s recent struggles, PayPal trades at an attractive valuation, standing at just 2.3x sales and 12.3x forward earnings, while boasting a 5-year revenue growth CAGR of 14%. The company has shown consistent revenue growth over 37 quarters and remains a strong generator of free cash flow. Despite these strengths, PayPal’s stock has yet to reflect its positive fundamentals, presenting a potential opportunity for investors.
Robinhood (HOOD)
Cruising Towards True Value: The Robinhood Revival
Robinhood: Beyond Meme Stock Stardom
Robinhood (NASDAQ:HOOD) emerges as an American fintech legend, offering online and mobile stock and crypto brokerage services since 2013. Renowned for its user-friendly, no-fee trading platform enticing a wave of young traders, Robinhood’s evolution is a testament to the relentless tide of innovation in the financial industry.
From Meme Stock Frenzy to Premium Service Provider
Shifting away from its meme stock spotlight, Robinhood has orchestrated a remarkable facelift. Enhancements include premium subscription tiers unlocking advanced trading tools, options trading capabilities, and high-yield cash positions. Undeniably, the platform’s cohort has surged, boasting over 23 million users with Assets Under Custody soaring beyond $118 billion by March 2024.
Unveiling a Profitable Quarter: The Dawn of a New Era
Recent financial revelations accentuate Robinhood’s prowess, showcasing a surprise profitable quarter that reverberated positively in the stock market realms. The 2024 trajectory paints a picture of promise and potential, hinting that Robinhood’s market value might still be a hidden gem awaiting its grand reveal. Despite sailing at around 8.6x trailing sales currently, reflecting on the 5-year revenue Compound Annual Growth Rate (CAGR) of 46% forebodes a future where these multiples ought to compress, placing HOOD in an advantageous position to ride the equity and crypto market waves in the forthcoming years.
Pioneering Insights from Skilled Investors
As this financial saga unfolds, the voices of industry visionaries resonate profoundly. Ian Hartana and Vayun Chugh, the architects behind Chandler Capital, are emblematic self-made investors contributing their astute perspectives to the financial world. With Seeking Alpha accolades adorning their names, Hartana and Chugh gravitate towards Growth At a Reasonable Price (GARP) stocks, delving into technology, energy, and healthcare sectors with a sight set on enduring, long-term investments.
On the publication date, Hartana and Chugh maintain no direct or indirect stakes in the discussed securities. The expressed opinions reflect the views of the author, aligning with the InvestorPlace.com Publishing Guidelines.
