Fintech stocks remain depressed. Should you buy?
Our theme of Fintech actions – which includes digital payments and lending players, card networks and insurance technology players – remains down around 1% year-to-date on an equal basis, compared to Larger S&P 500 which gained around 25% over the same period. There are probably a few factors behind the recent underperformance. First, these stocks have seen a big rally through 2020, increasing by around 80% on the year, and investors are likely to make a profit this year and look to value and cyclical stocks to play the reopening. of Covid-19. In addition, some of the businesses in our theme are also weighed down by the possibility that e-commerce sales growth during the holidays will be dampened due to supply chain issues and shortages, and the increase in online sales. store, customers venturing more and more.
That said, we continue to believe that the theme will benefit from the age-old shift to digital and contactless payments from physical payments, the growing adoption of e-commerce, and improved financial inclusion in the United States. and abroad. Square stock has been the best performer on our theme, up around 10% year-to-date. Square is emerging as a big player in payments, with offers such as the Cash app, which allows users to send and receive money, and Square Point-of-Sale, which allows merchants to process payments via a smartphone. On the other hand, Fiserv stock has been the worst performing, down around 1% since the start of the year. The company provides financial technology solutions to banks, savings banks, credit unions, investment dealers, leasing and finance companies, and retailers.
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[9/24/2021] Fintech stocks continue to lag the market. Is it time to buy?
Our theme of Fintech actions – which includes digital payments and lending players, card networks and insurance technology players – remains down around 1% year-to-date on an equal basis, compared to Larger S&P 500 which gained 19% over the same period. While most of the theme’s underperformance was due to a single stock, insurance tech player Lemonade, down 44% year-to-date on mixed quarterly reports after its IPO in 2020, even other names like Visa and Fiserv also underperformed. However, we believe the theme is expected to benefit in the long run from several trends, including the shift to digital and contactless payments from physical payments, the growing adoption of e-commerce, and improved financial inclusion in states. -United and abroad. Below are some of the recent developments of some of the actions in our theme.
PayPal is up about 19% year-to-date. Earlier this week, the company gave its app a major overhaul by adding savings accounts and new in-app shopping tools as it seeks to go beyond its core payments area. to become some kind of super financial app.
Visa only returned 4.4% in this year as the company saw sluggish cross-border volumes and lower consumer spending due to Covid-19. However, things are improving with improved vaccination rates and a slight moderation in Covid-19 cases in recent weeks.
Green Dot, a fintech company best known for its prepaid cards and banking services, has seen its stock drop 9.3% year-to-date as the stock has corrected slightly after its big rally to the end of the year. ‘in 2020. However, the company continues to do well, with the company consistently beating quarterly profit expectations this year.
[8/4/2021] Square-Afterpay agreement puts Fintech stocks back in the spotlight
Our theme of Fintech actions – which includes digital payments and lending players, card networks and insurance tech players – remains down around 1% year-to-date, compared to the larger S&P 500 which has gained 17% since the start of the year. The underperformance comes as investors shift away from technology and high-growth names to cyclical stocks to play the reopening after the Covid-19 lockdowns. However, the theme is expected to come back to the fore after the recent announcement from fintech major Square that it would buy Afterpay, an Australian company that buys now, would later pay a company in a transaction entirely in shares of $ 29 billion. The deal is important to Square (and the wider fintech space) as it brings together Square’s consumer apps and popular merchant solutions with a funding component, as it seeks to tackle banks and retailers. credit card companies for a greater share of the payments market. . The deal also comes at a time when younger customers are moving away from traditional credit, with “pay later” products gaining market share.
Within our Fintech actions theme, Square has been the best performer, with an increase of about 23% in its share since the start of the year. On the other hand, Lemonade, an insurance tech player, is doing the worst, with a 30% drop in its stock this year.
[7/13/2021] Square, Lemonade, Fiserv: Fintech stocks are underperforming. Is it time to buy?
Our theme of Fintech actions includes digital payments and lending players, card networks and insurance technology players who have the potential to disrupt the more than $ 1.5 trillion US insurance and financial services industry of dollars. These companies are likely to be big beneficiaries of the age-old shift from digital to physical payments, the growing adoption of e-commerce, and the need to improve financial inclusion in the United States and abroad. As a perspective, about 25% of U.S. households are unbanked or underbanked according to the FDIC, and technology could help bridge the gap. The fintech business is also likely to be very lucrative. Unlike the traditional financial industry, which comes with high costs related to branches, staff, customer acquisition, and regulatory overheads, fintech players largely operate virtually, with thin asset models. giving them more possibilities to improve their margins. Despite the opportunities, the theme has significantly underperformed this year, yielding around 2% to date, versus the S&P 500 which is still up nearly 16% over the same period. Below you will find a little more information about some of the actions in our theme and how they have evolved.
PayPal is one of the biggest players in digital payments. The stock has been our chart’s best performer, yielding 29% year-to-date, thanks to its peer-to-peer payment app Venmo, which has gained ground over Covid-19. The company’s decision to allow customers to buy and sell the popular Bitcoin cryptocurrency on its platform has apparently helped the stock as well.
Square, another major player in digital payments, has seen its shares increase by around 12% since the start of the year as its Square Cash app – which was best known for peer-to-peer payments – continues to grow. launch into banking and investment-related services. . Much like PayPal, the company is also betting big on the crypto space.
Visa is the world’s largest electronic payment solutions company. The stock has underperformed this year, gaining around 9% year-to-date, as the Covid-19-related travel slowdown resulted in lower cross-border transaction volumes. However, as the economy reopens, the company is seeing increased levels of consumer spending, which should bode well for the stock.
Fiserv is a company that provides financial technology solutions to banks, savings banks, credit unions, stock brokers, leasing and finance companies, and retailers. The title remains down about 4.4% since the start of the year.
Lemonade is an insurance technology player focused on tenant and homeowner insurance, pet insurance, and term life insurance. The company, which went public last year, remains the worst performing in our theme, dropping 21% year-to-date. The sell-off is likely due to mixed quarterly results and the expiration of the post-IPO blocking period.
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