Fintech stocks are poised for breakout growth once the dust settles on the 2022 stock market crash. Many of the companies listed below have grown their user base or plan to launch new, exciting products. Here’s everything you need to know about these exciting sectors all in one place.
What are Fintech Stocks?
Fintech stocks are companies that generate revenue through financial services related to digital payments, crypto, loans, and online banking.
Why are Fintech Stocks Falling?
Fintech stocks are crashing in price due to several factors that affect the entire sector. Here’s a list of those reasons:
- The Federal Reserve raised interest rates in March 2022 to curb inflation. This makes it more expensive to borrow money for consumers & businesses, which usually causes a slowdown in spending. When consumers spend less money, fintech companies are directly affected.
- Many fintech stocks were trading at crazy high P/E ratios but the November 2021 stock market bubble has burst. Now, these stocks are falling down to more realistic valuations.
Why Invest in Fintech Stocks
Fintech stocks generate revenue much easier than traditional brick-and-mortar businesses due to the economies of scale gained through technology. It’s likely that you use 1 or several of the companies mentioned below if you have access to high-speed internet.
Top Fintech Stocks by Market Cap
1. Paypal (PYPL) – Best Large Cap Fintech Stock Under $100
Paypal is my top overall favorite fintech stock due to its massive size and importance in the overall digital economy. The company has 426 million active accounts and remains the most popular way to send and receive money online.
PYPL Key Metrics
- 2021 Revenue: $25.4 billion (Up 17%)
- 2021 Net Income: $4.17 billion
- 2021 Total Payment Volume (TPV): $1.25 trililion
- Total Active Accounts: 425 million
- P/E Ratio: 24
PYPL has a wide moat and tons of brand recognition despite dealing with several internal issues related to cybersecurity and account safety.
PYPL stock trades at a fair valuation of under $90 but Paypal shares could dip lower in the short run.
2. Block Inc – Best Fintech Stock Related to Bitcoin & Crypto Mining
Block is 2nd most popular payment app in America thanks to Square & Cashapp but the company will also start mining Bitcoin with the help of Tesla’s power energy grid.
SQ Key Metrics
Former Twitter CEO Jack Dorsey stepped down from his dual CEO role in 2021 to fully focus on Block Inc, which is a good sign for shareholders moving forward. However, the problem is that SQ stock is grossly overvalued with a bloated P/E ratio of 300!
Overvalued fintech stocks will continue selling off as institutional and retail investors flock towards the safety of bond yields, dividend stocks, or just plain cash while remaining on the sidelines.
I’m intrigued by Dorsey’s plans to mine Bitcoin, which could pay dividends after the next Bitcoin halving.
3. Coinbase – Best Fintech Stock Under $200
Coinbase is my preferred cryptocurrency exchange with over 89 million verified users. The company earns money through crypto commission fees but also launched an NFT marketplace to help diversify its revenue base.
Cryptocurrency markets move in bullish and bearish cycles based on the Bitcoin halving cycle because Bitcoin is the most dominant crypto coin and controls the majority of the price movements.
Coinbase earned $7.84 billion in 2021 revenue along with $3.62 billion in net income during the same period. I’m very bullish on Coinbase long term even though there may be some short-term volatility right now.
Global crypto adoption is growing faster than the internet did and I expect Coinbase to remain the North American cryptocurrency market leader through this period.
Coinbase is my favorite fintech crypto company by far and be sure to check out the top cryptocurrency stocks if you want to get in early on the blockchain & crypto market boom.
4. Upstart – Best AI Lending Fintech Stock
5. Sofi – Best Fintech Stock Under $10
6. Visa – Best Fintech Dividend Stock
Best Fintech Stocks By Price Range
Fintech Stocks Under $50
How to Buy Fintech Stocks
Full Disclosure: I own shares of COIN