3 Fintech Front-Runners That Can Finance Your Future
The financial industry is the backbone of the global economy. It is also home to some of the most powerful companies in the world. But the problem is, these banks never seem to have the consumer in mind. It’s all about profits charging fees and making the customer bend over backwards just to use their products and services. Enter fintech companies, which offer customers an online banking experience with minimal fees, intuitive system interfaces, and flexibility among products.
Why should you be interested in fintech stocks? Many believe that the traditional financial industry is the perfect one to be disrupted. Technology runs everything in our daily lives. Furthermore, banking on a smartphone or tablet is so much easier than going to a branch in person. If you believe in a digital future for banking, then these three fintech stocks need to be on your watchlist.
Robinhood (HOOD)
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Robinhood (NASDAQ:HOOD) is a popular online brokerage and financial services platform. It was founded in 2013 and went public in 2021. It is widely known for being a no-commission trading platform that allows users to trade stocks, options, and cryptocurrencies. Robinhood has played a major role in introducing the millennial generation to the stock market, particularly during the meme stock short squeeze events in 2020. Wall Street analysts are still mixed when it comes to price targets for Robinhood. As of February, 12 analysts cover the stock with a one-year price target range of $10.41 to $25.00 and an average target of $15.59.
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This fintech stock is well off of its all-time high price of $85.00 per share shortly following its IPO. HOOD has been consolidating for the better part of the last two years and has recently exhibited a breakout from that range following a better-than-expected earnings report. In the most recent quarter, Robinhood posted a surprise profit that was fueled by higher interest from loans and a renewed interest in stock trading. The company also expects strong and profitable growth for the rest of 2024. With a look toward increased profitability as interest rates fall back down, and plans to reduce costs through staff cutting, Robinhood is a worthy stock pick for any investor looking for a fintech stock into 2024.
SoFi Technologies (SOFI)
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SoFi Technologies (NASDAQ:SOFI) is another California-based online fintech company. You might recognize the name from the NFL stadium in Los Angeles for the Rams and the Chargers! Currently, 18 Yahoo Finance analysts project a price target range from $3.00 to as high as $25.00, with an average price target of $9.28.
What sets SoFi apart from other fintech stocks is its position as a bank with a national banking charter. SoFi offers a long list of products and services including brokerage trading, personal banking, and student and personal loans. Like Robinhood, SoFi posted a strong quarterly profit, marking its first net income positive. Last year, total customers grew by 44% from 2022. Management anticipates annual revenue will grow by 20 to 25% each year through 2026.
Looking at its financials, SoFi’s Price to Sales ratio of 3.83 times sits slightly overvalued compared to its industry median of 2.58 times. However, with management’s strong continued growth estimates, we see this valuation as still reasonable for investors with a long-term mindset.
Nu Holdings (NU)
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Nu Holdings (NYSE:NU) is the parent company of NuBank which is the largest fintech company in Latin America. As of February, NuBank has well more than 90 million customers between Brazil, Mexico, and Colombia.
Incredibly, more than half of all adults in Brazil use NuBank for personal banking, investing, or other financial services. In 2022, the company also introduced Nucripto, a way for users in Latin America to have access to Bitcoin, Ethereum, and other major tokens. Perhaps the most intriguing part of Nu Holdings is that it caught the attention of Warren Buffett. It impressed him enough to invest $1 billion into the stock and hold it in his core portfolio.
Nu Holdings is a much larger company than both SoFi and Robinhood. However, its astronomical financial that sets it apart from the competition is its Customer Lifetime Value to Customer Acquisition Cost ratio of 30 times. While NU is working with balancing these considerable top and bottom line growth with operating risks in Latin America, investors looking to diversify their portfolio with a global fintech leader should consider Nu Holdings.
On the date of publication, Ian Hartana and Vayun Chugh 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 writer, subject to the InvestorPlace.com Publishing Guidelines.
Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.
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