Robinhood’s (NASDAQ:HOOD) July 29 IPO was one of the most anticipated of this year and last. It basically doubled in value throughout the first week following the IPO, before giving back some of those gains. Nevertheless, HOOD stock is significantly up, from $34 to $45.06 at the start of Aug. 19, leading to all around increased interest in fintech stocks.
Robinhood currently only has three analysts covering it. Their price predictions vary wildly, leaving investors scrambling to understand where prices are heading. In any case, share prices have continued to move upward in aggregate.
That has left investors who didn’t jump in on the IPO wondering about the broader state of fintech and fintech stocks. The thinking goes that fintech, as a rising industry, must hold many other great opportunities. Those who missed out on Robinhood want to know about those broader opportunities.
But what does the future hold in store for fintech, defined as computer programs and other technology used to support or enable banking and financial services? Well, for one, growth.
A report by Market Data Forecast anticipates that the fintech sector will grow to a value of approximately $324 billion by 2026. If that prediction is accurate, then the sector will experience compound annual growth of 23.61% during that period.
Investors who missed out on the Robinhood IPO need not fret too much, then. There’s bound to be even better opportunities cropping up in fintech stocks in the near future.
Here are seven such stocks which do just as well as Robinhood, or even better:
- Paypal (NASDAQ:PYPL)
- Square (NYSE:SQ)
- Coinbase (NASDAQ:COIN)
- Global Payments (NYSE:GPN)
- Affirm (NASDAQ:AFRM)
- Fiserv (NASDAQ:FISV)
- JPMorgan Chase (NYSE:JPM)
Fintech Stocks to Buy: Paypal (PYPL)
Paypal is among the most visible names in the fintech space, and has been for a long, long time. It’s fair to state that the digital payments firm is among the forefathers of the fintech movement. That long history is one of many reasons investors should consider Paypal when seeking fintech exposure. It won’t be the next Robinhood in terms of immediate growth potential. But Paypal has plenty of growth potential without the volatility of a Robinhood.
Recently Paypal stock declined in price following its Q2 earnings release. The share price decline was somewhat counterintuitive as the company beat Q2 earnings forecasts.
Net revenues reached $6.24 billion and the company saw active accounts surpass the 400 million user threshold.
The reason that PYPL stock has declined from a bit over $300 to under $275 following the earnings report was that its guidance numbers were below those Wall Street sought. The company gave guidance of $6.15-$6.25 billion in sales and earnings of $1.07 per share. Analysts were expecting Q3 guidance of $6.27 billion in sales and $1.12 of earnings per share.
Take it for what it is: A bump in the road and opportunity to pick up undervalued Paypal shares.
The company also moved into cryptocurrency last year, specifically into wallet management. The company has the recognition and resources to move in nearly any direction it sees fit as it relates to fintech.
2021 has been a volatile year for share prices of the credit card processing solutions company. SQ stock has seen a few cycles in which it has peaked near $270 and then fallen to near $200. It looks to be steadily moving upward now, and there’s reason to be interested hereafter.
One of the primary reasons investors should be considering Square shares currently is its recent announcement that it will be acquiring Australian firm, Afterpay Limited.
Afterpay is a company that developed a buy now, pay later (BNPL) platform. Square will integrate the functionality into its own Seller and Cash App ecosystems. This will allow merchants of all sizes to offer BNPL within its Cash App. This will, of course, open up previously untapped streams of revenue for Square. The deal is expected to close in Q1 of 2022 and cost Square $29 billion in equity.
Afterpay is currently offered by 100,000 retailers worldwide and counts 16.2 million users. The impetus behind the deal for Square is that it opens up new opportunities outside of credit, which younger consumers are increasingly wary of.
Fintech Stocks to Buy: Coinbase (COIN)
Coinbase has several similarities to Robinhood. Most notably, both companies undertook high-profile IPOs in 2021. Well, technically Coinbase was a Direct Public offering (DPO) but the effect is that both companies are now publicly traded. Yet, while Robinhood’s IPO has proven to be value creating thus far, Coinbase has not.
Since becoming publicly traded in April, COIN stock is down nearly 20%. That isn’t good, but it’s actually better than it was. Coinbase shares traded as low as $231 in the beginning of August. That looked to be the price range that it was settling into following its disappointing IPO. But since then it has retraced some of its losses, moving from $231 to $240.60.
Like Robinhood, Coinbase too, is controversial. InvestorPlace’s David Moadel pointed out that Coinbase, along with its CEO and Chief Legal officer are now subject to a lawsuit in which “Coinbase and its executives of making ‘materially misleading statements’ in their offering materials at the time of the company’s public listing.
“They’re also being accused of offering positive statements that ‘lacked a reasonable basis.'” So, while Coinbase trends upward for the time being, it will now contend with legal headwinds among others.
Global Payments (GPN)
According to multiple outlets the recent dip in Global Payments share prices may be a contrarian opportunity. That’s because many believe it is currently oversold. One such report suggests that GPN shares are oversold as indicated by a metric called relative strength index. That metric generally moves between o and 100, with a reading under 30 being indicative of overselling. GPN’s current relative strength index sits at 26.15.
Thus, it is oversold, and a contrarian investor could expect the market to push its price upward relatively soon.
That tangent aside, let’s look at Global Payments from a fintech perspective. Global Payments is a payment technology company that offers online, mobile, point-of-sale and integrated payment systems. Is this company anything like Robinhood? No. But it is a strong competitor in fintech.
It is showing revenue growth per its most recent earnings report, and rising net income figures. There’s a strong argument that now is the time to jump on board as it relates to price.
Fintech Stocks to Buy: Affirm (AFRM)
Affirm is a digital and mobile first platform. Consumers who shop using Affirm simply select items which they want to purchase from various sites, and choose to pay with Affirm. The service works as a loan service, but with a major difference than credit purchases.
That difference is that consumers can view the total payment of their credit purchase at the point-of-sale.
Affirm, like Robinhood, has also undergone an IPO in 2021. To date, it has been a disappointment after a strong start not dissimilar to that of Robinhood. Within the first month of the IPO, AFRM stock had gone from $90.90 to nearly $147. It then did an about face, declining quickly into the $70 price range, and sits below $65 half a year later.
Whether it ultimately rebounds or not, investors can clearly see why there is enthusiasm around Affirm’s product. The younger generation is increasingly skeptical of the opaque nature of credit card purchases. I would venture to guess that the vast majority of consumers would rather know exactly how much they will pay for credit purchases, than not.
Fiserv is a wide-reaching fintech company. The company processes more than 12,000 financial transactions per second, boasts 1.4 billion accounts globally, 100 million digital banking users, and 10,000 financial institutional clients. Another interesting snippet is that it has touchpoints with nearly 100% of U.S. households.
It’s fair to say that the company and its services are ubiquitous across the country. Fiserv is also making strides forward as it relates to fintech and payments.
The company was recently awarded the 2021 Paytech Award for the Best Smart Payments Solution on Aug. 12. The company was given the award for its solution, Deposit Line. As per the company’s news release, Deposit Line “enables financial institutions to better address the consumer need and demand for short-term by offering immediate liquidity products to customers using deposit-based scoring. Deposit Line provides end-to-end support for an organization’s short-term credit offering, including the determination of accountholder eligibility and suggested available credit limits, using information about the consumer’s deposit account.”
Fintech Stocks to Buy: JPMorgan Chase (JPM)
JPMorgan Chase isn’t the first name that springs to mind when the topic of fintech arises. Yet, like all financial institutions, it faces a scenario in which it can either get with the times, or get left behind. Hyperbole aside, there is reason to believe JPMorgan Chase realizes what’s at stake.
The company houses both a digital innovation team and a blockchain center of excellence.
It would be naïve to think that companies of JPMorgan Chase’s stature haven’t long been abreast of all of the fintech changes occurring for a long time. The company’s digital innovation team is spread across New York, London and Hong Kong and features an incubator called AreaX. The team also employs a research arm that identifies transformative firms in wholesale banking.
On the blockchain side, JPMorgan Chase even created a digital coin, JPM Coin, representing fiat currency.
As far as comparisons go, Robinhood and JPMorgan Chase are at vastly different ends of the financial spectrum in most respects. But, as fintech disruptors, the two are similar insofar as their potential.