3 High-Growth Fintech Stocks to Buy for 2023

The fintech sphere had been in constant motion before the stock market in 2022. For example Global X Fintech ETF grew 29% in value from 2020 to 2021. The opposite happened the following year, in line with the broader market sell-off. However, the fintech sector took a much harder beating, as it is dominated by growth stocks. Therefore, now is probably the best time to buy some high-growth fintech stocks.

The fintech space caught fire during the pandemic years, with global investment growing by $335 billion. Spending increased in the sector due to increased demand for online financing, AI-powered decision-making and use in financial institutions. Despite the decline in share prices in the sector, its long-term bull case remains intact. The global fintech market is expected to grow at a staggering 20.3% from 2021 to 2030. Moreover, the spread of embedded finance is likely to grow at a more robust pace of 421% over the next five years.

Shopify (SHOP)

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Shopify (SNEEZE:SHOP) is a ubiquitous e-commerce platform with tentacles spread across several growth areas in its niche. Over the years, it has expanded its merchant solutions with the resources and financial tools to continue growing the business. Some include the loan program, payment processing solutions and others. Their enterprise solutions have been growing by double-digit margins in recent quarters, registering an impressive 25.8% growth last year.

Investors are concerned about Shopify’s growth rates in recent quarters. Growth rates have normalized in the post-pandemic world complicated by a problematic macro environment. Revenue growth is just 21.4% for the year, which pales in comparison to the 59% average growth over the past five years.

Still, it plans to raise prices by at least 33% for its monthly plans and continues to add and expand features every quarter to push growth rates higher. E-commerce remains a secular growth trend as well, which bodes remarkably well for Shopify’s business. With SHOP share trading at its lowest level in several years, it may also be worth betting on current levels.

PayPal (PYPL)

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PayPal (NASDAQ:PYPL) is a fintech pioneer with a user base of 435 million, offering wallets, merchant services, payment processing and more. To put things into perspective, PayPal’s user base has grown by over 100% from 2017 to 2022. Additionally, over the past five years, they have increased their sales and earnings by 17.5% and 16.9% respectively. However, amid a myriad of headwinds the company faces, it has lost nearly three-quarters of its value since the summer of 2021.

Slow consumer spending has negatively affected the company’s top and bottom line results. However, management has done well to contain costs amid a slowdown in sales growth. Operating expenses have grown by 2.7% over the past year, a testament to management’s superior execution.

Looking at the bigger picture, I expect PayPal to recover from the headwinds in the coming months. Another interesting point is that the platform sees 60% more transactions per user for its mobile app users. However, adoption rates are remarkably low, with a runway of around 200 million accounts yet to adopt the app.

Upstart Holdings (ESTABLISHMENT)

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Upstart Holdings (NASDAQ:ESTABLISHMENT) is an innovative fintech company leveraging its patented AI technology to improve lending practices. It has been incredibly profitable in most quarters since it went public, generating triple-digit growth during the pandemic. However, traditional lenders are back in the mix after the pandemic, while inflationary pressures are weighing on the lending business.

With lower lending volumes, the company has effectively reduced its workforce by 20%, bringing in $57 million in cash savings on operating expenses. The management also wants to build long-term capital partnerships for Upstart. At the end of the fourth quarter, the platform has 92 lending partners, an increase of 119% from the previous year. Also, 82% of personal loans are automated as the company moves to operate a significantly leaner cost structure.

At the date of publication, Muslim Farooque 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 the InvestorPlace.com Publishing Guidelines.