It’s been an odd year for fintech stocks, as market volatility saw companies rise and fall rapidly on an almost weekly basis. It’s clear, however, that the market is continuing to grow swiftly as higher demand for online financial solutions becomes more and more prevalent.
The industry saw a slew of companies enter the public market this year (despite Stripe still holding out on us) so we decided to take a look at some of the stocks poised for a potentially lucrative year in 2022.
Square (NYSE: SQ) has come a long way since its inception as a credit card reader manufacturer. Now, its ecosystem encompasses point-of-sale, business financing, and payroll tools amongst a litany of others.
In the difficult industry of finance, it has become all things to all people. Institutions can avail of its traditional banking features through Square Capital, businesses can utilize the Square Online Store to promote multichannel presence, and consumers can make use of CashApp and all of its offerings.
CEO Jack Dorsey is now free of his Twitter shackles and is poised to take the company to new heights. The name change to ‘Block’ epitomizes the company’s focus on the crypto market, but the existing Square brands will remain unchanged.
All of this points towards a company that, despite a market cap consistently flirting with the $100 billion mark, is only getting started.
A tough close to the year has seen market sentiment in Upstart (NASDAQ: UPST) fall dramatically, however, there’s still so much to be excited about with this company. The artificial intelligence (AI) based lending firm is disrupting an industry that has remained stagnant for far too long.
FICO scores have been the dominant metric behind successful loans since the 1980s, which has locked many young people out of credit following their general reluctance to take on debt following the 2008 Financial Crisis.
Upstart has innovated by utilizing data science to create much more accurate and less subjective risk profiles of credit applicants. It primarily deals with banking partners as opposed to offering credit itself, with more than 97% of its revenue coming from fees for its proprietary services. The company has also begun to explore a move into auto-loans following its purchase of Prodigy Software earlier this year.
All of this points to a company that is ripe for exponential growth. Yes, there certainly are risks associated with Upstart, namely a very high level of customer concentration. But, the opportunity the company has to transform the lending market could ultimately lead to a very exciting and profitable future.
PayPal (NASDAQ: PYPL) has been one of fintech’s true pioneering companies since being founded all the way back in 1998. The company has put a huge focus on its consumer-facing enterprises. Social payment platform Venmo continues to lead the market, and the smart acquisitions of buy now, pay later (BNPL) firm Paidy and consumer couponing company Honey have helped PayPal enormously.
The company also continues to grow steadily, with revenue consistently increasing each year. This dependable growth will certainly be alluring to investors, especially following a particularly volatile year for fintech companies. There’s nothing wrong with backing the favorite, especially when that favorite has such a large proportion of the market share.
PayPal, never one to be lagging behind, has also joined Square in the crypto space. The company first launched its cryptocurrency trading service in late 2020, and it is now available in Venmo since April of this year. While this market might not be for everyone, these moves show PayPal’s enduring willingness to innovate as new opportunities present themselves. This should inspire confidence in investors that the company won’t fall behind the rising pack of companies nipping at its heels.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.