The 3 most innovative Fintech companies you need to know about
The potential of the financial technology (fintech) sector, and fintech stocks operating in this space, is impressive. Although cashless payments have increased in recent years, most transactions are still made with cash. But that too can change. In fact, according to PwC, global cashless payment volumes are expected to jump to more than 80% by 2025.
According to the Pew Research Center, about 40% of Americans have gone cashless, up from 24% in 2015. The number of Americans who still rely on cash is falling steadily at the same time, from 18% in 2018 to 14% last year . That benefits the fintech market, which could be worth nearly $699 billion by 2030. Accordingly, investors may be well served by investing in fintech companies with strong market positions.
Here are three such fintech stocks that top my list right now.
SoFi (SOFI)
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SoFi (NASDAQ:SOFI) is one of the best fintech stocks on my list, with impressive double-digit revenue growth in recent quarters, along with narrowing losses. This company’s focus is to make it easier for its 5.2 million users to manage their money in one app. As far as simplicity goes, there’s a lot to like about SoFi’s business model.
The company’s strong growth has resulted in better finances. Notably, SOFI’s fourth-quarter loss narrowed to $40 million, or 5 cents per share. Analysts were only looking for a loss of nine cents. Adjusted EBITDA came in at $70 million, ahead of adjusted EBITDA of $5 million year over year.
As Mizuho noted, “The big hit on revenue and adjusted EBITDA are the main positives for the 4Q results. The promise to deliver positive GAAP net income in 4Q 2023 should be well received, as GAAP losses were a key deterrent in 2022 for FinTech investors.”
For those looking for a fintech stock with better fundamentals, SoFi looks like a buy here.
FinTech ETF (FINX)
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Or look at an ETF such as Fintech ETFs (NASDAQ:FINX). With an expense ratio of 0.7%, the ETF invests in companies at the forefront of the emerging financial technology sector. This includes industries that are currently changing, such as insurance, investment, fundraising and mobile and digital solutions.
PayPal (NASDAQ:PYPL), Fiserv (NASDAQ:FISV), Block (SNEEZE:SQ), Global payments (SNEEZE:GPN), and Coin base (NASDAQ:COIN) are some of the top holdings. In addition, we must consider that according to Global X, in 2020, the number of online banking consumers was close to 1.9 billion, and by 2024 it could be up to 2.5 billion – all thanks to the digital transformation of society.
Therefore, for those looking for a wide range of diversification in the fintech sector at a relatively low cost, FINX stock is a great option to consider.
Adyen (ADYEY)
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Adyen (OTCMKTS:ADYEY) is a potentially massive global technology company providing payment solutions, including in-person, online, risk management and financial products to digital businesses, mobility, subscription and marketplaces. Better, all payments processed through McDonald’s (NYSE:MCD), for example go through Adyen. The client list includes other monster blue-chip companies such as Microsoft (NASDAQ:MSFT) and Booking Holdings (NASDAQ:BKNG), among others.
While earnings weren’t hot across the board, the company still reported net income growth of 30% year-over-year to €721.7 million. Processed volume also increased by 40% year-on-year. Consequently, while the stock has seen its fair share of downgrades recently, the risk is still well worth it for those looking for a higher risk, higher upside bet.
At the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.
