3 Fintech stocks to sell amid this market turmoil

Many sectors have been damaged in the train wreck of this year’s stock market. But few have been hit as hard as the shares of financial technology (fintech) companies. These are companies that use new technology to compete with traditional banks and other financial institutions. Think of payment apps, online lenders and digital exchanges. Most fintech companies use artificial intelligence, blockchain, cloud computing and big data to deliver financial services to consumers. While the technology used by fintech companies is cutting edge, it is also risky, causing many investors to flee the sector as stock markets around the world continue to fluctuate. The Global X FinTech ETF (NASDAQ:FINX) which consists of all the leading companies in the area, has fallen 57% in the last 12 months and continues to slide downwards. Many fintech stocks are down 70% or more for the year. With the outlook for both markets and the global economy still uncertain, fintech stocks can’t be counted on to reverse their downward spiral anytime soon. Here are three fintech stocks to sell amid this market turmoil.

Block (SQ)

Source: Jonathan Weiss / Shutterstock.com

Most investors would agree that now is not the time to invest heavily in crypto, when the price of Bitcoin (BTC-USD) is at a two-year low and $1.4 trillion has been wiped from the cryptocurrency market this year. Unfortunately, Jack Dorsey, founder and CEO of the fintech company Block (SNEEZE:SQ), remains a crypto-evangelist. Dorsey renamed his payments company Block (it was previously called Square) to emphasize his focus on the blockchain technologies that underpin cryptocurrencies like BTC.

This helps explain why Block currently has more than 8,000 Bitcoins. It also helps explain why SQ stock has fallen 70% over the past 12 months, including a 62% decline this year.

The tragedy is that the Blocks Cash App payment system remains extremely popular and continues to perform well. The company’s revenue, minus its Bitcoin holdings, has remained strong this year, rising 37% to $7.6 billion through the first three quarters. Unfortunately, Dorsey turned the company toward crypto just as it was peaking, and the current collapse of digital coins and tokens is dragging Block down with it. Get out of the SQ warehouse while you still can.

Affirm Holdings (AFRM)

Source: Piotr Swat / Shutterstock.com

For a really ugly stock chart, take a look at Verify inventories (NASDAQ:AFRM). The San Francisco-based fintech company’s stock has been on fire this year amid market turmoil. After falling 87% since January, AFRM stock is now down 90% in the past year and treading water at $13 a share. Somewhat ironically, Affirm Holdings was launched by Max Levchin, one of the founders of PayPal (NASDAQ:PYPL) and an architect behind the modern online payment system.

Despite his past success, Levchin and his team have struggled at Affirm. Much of the problem appears to be the company’s sharp focus on buy-now, pay-later loans. Affirm runs a consumer app that lets buyers get loans, and it even has a partnership with Walmart (SNEEZE:WMT) that promotes Affirm Holdings to customers in-store and on Walmart’s website. After a brief moment in the sun, however, the entire buy-now-pay-later industry has come under heavy criticism for putting consumers in debt.

Add to the picture Affirm’s mounting losses and slowing growth, and it becomes clear why many analysts and investors have written Affirm Holdings off as a fintech stock to sell amid this market turmoil.

SoFi Technologies (SOFI)

Source: rafapress / Shutterstock.com

Another leading fintech company that has imploded this year is SoFi technologies (NASDAQ:SOPHIE), a San Francisco-based company that likes to refer to itself as an “online bank”. SoFi offers student and car loans, mortgages, credit cards and everyday banking services, primarily through a mobile app on smartphones. The company is heavily involved in student loans throughout the United States. As is the case with the other names on this list, things have gone downhill for SOFI stocks in 2022. This year, the stock price has fallen 70%, leading to a decline. over 12 months to 75%.

At its current level of $4.52 per share, SoFi Technologies is officially a penny stock, defined as any security that trades for less than $5 per share. The company has been plagued by many of the problems that plague the other stocks on this list, including poor financial performance and exposure to cryptocurrencies through its SoFi Digital Assets unit.

The Senate Banking Committee recently took issue with SoFi’s exposure to crypto. In addition, the federal government’s ongoing moratorium on student loan repayment and the Biden administration’s student loan forgiveness program have reduced SoFi Technologies’ revenue. SOFI is definitely a fintech stock to sell amid this market turmoil.

At the date of publication, Joel Baglole did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Guidelines for publication.