In the finance landscape one trend has been more rapid than the rest, the rise of fintech. As this trend continues its upward trajectory, investors eagerly seek opportunities to ride the wave of financial disruption. This article explores three fintech trend stocks that stand out in the sector and hold the potential to deliver significant returns for investors.
The first stock takes a customer-first approach and successfully expands its market scope. The second one has exhibited remarkable revenue and profit growth. While the third one targets a massive opportunity in the fintech space.
I will delve into the details of each company’s strategies and market prospects. Doing so makes it clear that these three stocks are well-positioned to capitalize on the booming fintech trend.
Block (SQ)
Block (NYSE:SQ) employs a customer-first approach, which aims to serve customers, build strong relationships and expand through word-of-mouth referrals. It follows the Rule of 40, balancing revenue growth and profitability while using artificial intelligence for data-driven decisions. Block has successfully broadened its market scope to include larger businesses while maintaining user-friendly products. Their resilient business model, based on gross profit, enables them to weather economic challenges.
Notably, the company has an ecosystem model that combines breadth and depth. It provides a comprehensive and interconnected suite of services for sellers and consumers. Their vertical points of sale, particularly in the restaurant and retail sectors, have experienced significant growth. Cash App, Block’s consumer-focused platform, has great potential for growth and monetization. Fundamentally, Block’s strategy revolves around increasing active users, growing inflows per active user, and optimizing monetization rates. By leveraging its ecosystem model, Block aims to connect consumer and seller ecosystems, creating added value and growth opportunities.
PayPal (PYPL)
PayPal (NASDAQ:PYPL) has exhibited impressive revenue and profit growth over the past nine years. It is expanding its revenue threefold to approximately $30 billion and tripled its profits despite reducing its reliance on eBay (NASDAQ:EBAY).
PayPal’s commitment to innovation is evident in its product roadmap, which introducedhow m services like buy now pay later (BNPL) and improved integrations to stay ahead in the payment industry. With access to valuable data assets, PayPal plans to provide personalized consumer experiences and grow its high-margin branded merchant business. It sees potential growth in value-added services like subscriptions, BNPL and enhanced wallet features.
Overall, PayPal’s unique positioning, scale and extensive merchant partnerships enable it to redefine checkout experiences for both consumers and merchants. PayPal’s strong momentum in the BNPL space and its strategic initiatives for international expansion through Braintree present growth opportunities.
SoFi Technologies (SOFI)
SoFi Technologies (NASDAQ:SOFI) is constantly tapping into vast opportunities. For instance, the student loan market alone amounts to about $1.8 trillion in loans underwritten from 2006 to 2020. Approximately $200 billion of loans fall within SoFi’s price range and credit box, offering significant market share capture potential.
Also, SoFi’s unique value proposition allows borrowers to refinance at lower interest rates or extend their loan terms without extra costs, driving increased demand. The recent acquisition of a bank charter has strengthened its balance sheet and funding capacity. Specifically, smart lead conversion and cross-selling financial services products achieve efficient market share growth, reducing customer acquisition costs.
The company’s growth outlook remains positive, driven by strong member and product growth in personal and student loans. The recent acquisition of Wyndham Capital will boost the home loan business. SoFi foresees ongoing healthy deposit growth, anticipating over $2 billion in deposits per quarter. Also, it can maintain a strong value proposition for depositors even if interest rates decrease.
As of this writing, Yiannis Zourmpanos held a long position in PYPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.