Fintech Disruptors: 7 Growth Stocks That Will Revolutionize Finance
Some fintech disruptors in the stock market are looking to disrupt the future of finance. These companies are leveraging cutting-edge technology to revolutionize how individuals invest, trade, and manage their finances. By harnessing artificial intelligence, machine learning algorithms, and more, they should also be at the front of investors’ minds.
Investing in these companies not only presents an opportunity to participate in the forefront of technological innovation but also offers the potential for significant financial return. Furthermore, they’re quick to adapt, come up with new ideas, and grow fast. So, if you invest in them now, you could see some impressive returns on your investment. Plus, as more people turn to digital and automated financial services, these companies are likely to grab even more market share, which means more money for investors like you in the future.
So here are seven fintech disruptors for investors to consider in February.
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Global Payments (GPN)
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Global Payments (NYSE:GPN) is a provider of payment technology and software solutions globally. Payment technology is advancing rapidly, and GPN stock is at the forefront of its development, particularly in Europe.
I like this pick because it reported a strong performance for the fourth quarter and full year of 2023. The GAAP revenue for the fourth quarter was $2.43 billion, and adjusted net revenue was $2.19 billion, both marking an 8% increase. For the full year, revenue reached $9.65 billion, up 7.6%. The operating income saw a significant increase of 168.1% to $1.72 billion for the year.
The company has highlighted its plans to launch a joint venture with Commerzbank in the first half of 2024, aiming to expand its digital payment services to small- and medium-sized businesses across Germany.
Analysts have a positive outlook on Global Payments, with a consensus rating of “Moderate buy.” The stock’s price targets range from $105 to $186, with an average target of $151.92, suggesting a potential upside of 14.3% from the current price.
Nu Holdings (NU)
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Nu Holdings (NYSE:NU) operates a digital banking platform primarily in Latin America, offering a wide range of financial services.
Like GPN stock, NU also reported a strong previous quarter. The company reported a record quarterly gross profit of $1.1 billion, an 87% year-over-year increase, with a gross profit margin expanding to 48%. Nu Holdings further solidified its capital position, boasting Capital Adequacy Ratios significantly above the required minimums, complemented by $2.4 billion in excess cash.
Looking ahead, Nu Holdings’ strategic focus includes expanding its product portfolio, which now encompasses credit cards, NuAccounts, personal loans, insurance policies, and investment services, catering to a broad customer base across Brazil, Mexico, and Colombia.
Due to its recent financial results, investors can consider scooping up shares of NU if they want a part of a dominant player in fintech, especially if they also want to invest in developing markets in Latin America.
Shift4 Payments (FOUR)
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Shift4 Payments (NYSE:FOUR) is a digital payments processor focusing on sectors like e-commerce and hospitality. The potential of e-commerce almost goes without saying, as more retail stores close down unable to compete with the likes of Amazon (NASDAQ:AMZN) and other marquee online brands. At the same time, the hospitality sector gives FOUR some endurance.
I think that due to carving itself a niche in these sectors, it’s one of those fintech disruptors that investors should pay close attention to.
Some recent analyst coverage for FOUR stock is especially attractive, and I concur with this viewpoint. For 2024, Shift4 Payments is expected to experience robust organic growth, projected at a 25-30% compound annual growth rate (CAGR). This growth is considered particularly compelling, given the stock’s valuation at less than 16x forward free cash flows.
Furthermore, management seems to have a lot of skin in the game to ride on its success, with insiders owning 32.14% of the company’s stock.
PayPal (PYPL)
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PayPal (NASDAQ:PYPL) is a giant in digital payments, offering a wide array of financial services worldwide.
I think that PYPL stocks are one of those companies that will continue to innovate in fintech moving forward. Specifically, PayPal’s announcement of launching AI-driven products and a one-click checkout feature, aiming to capitalize on the growing investor interest in artificial intelligence, should be long-term growth drivers for the company.
Now might also be a good time for investors to scoop up shares due to what I believe is an irrational sell-off for its stock price. The company’s recent earnings surpassed expectations, but its guidance for 2024 fell short of Wall Street’s hopes, contributing to a mixed reaction. Despite these challenges, PayPal remains committed to driving profitable growth in the coming years.
Adyen (ADYEY)
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Adyen (OTCMKTS:ADYEY) is a Netherlands-based digital payment processing platform. It has seen a significant rebound in its share price, driven by strategic changes and quarterly results that indicate its strategy is beginning to pay off.
Framing this effort is that Adyen’s management has outlined a promising three-year plan aimed at delivering more than 20% annualized revenue growth and improving margins, which has helped alleviate investor concerns sparked by earlier lackluster financial results in previous quarters.
Adyen’s performance across its segments in 2023 demonstrates its solid market position and potential for future growth. The Digital segment saw a 21% volume growth from the previous year, with US Digital volumes growing faster than the market average. The Unified Commerce segment reported a 25% increase, and the Platforms segment, excluding eBay volumes, showcased a remarkable 120% growth.
If ADYEY continues its financial performance, then I believe its pivot as outlined in its three-year plan could make it one of those fintech disruptors for the future.
SoFi Technologies (SOFI)
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SoFi Technologies (NASDAQ:SOFI) is a digital-first financial services and technology firm that has recently reported its first quarter of GAAP profitability. With a significant part of its operating costs being fixed, there’s potential for substantial earnings growth as revenue continues to increase.
Looking ahead to 2024, SoFi expects adjusted net revenue between $550 to $560 million, adjusted EBITDA between $110 to $120 million, and GAAP net income between $10 to $20 million for the first quarter. For the full year, the company anticipates the combined growth of the Tech Platform and Financial Services segments to be at least 50%, with lending revenue at 92% to 95% of 2023 levels.
SOFI could be one of the most promising fintech stocks that has a heavy AI focus. It uses this tech to enhance customer experience, streamline operations, and detect fraud. With rapid growth, 7.5 million members, and $18.9 billion in deposits, and counting, SOFI is one of those fintech disruptors to consider.
Robinhood (HOOD)
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Robinhood (NASDAQ:HOOD) is one of the most iconic names for retail stock broking in the United States.
The company has laid out a robust plan for 2024, focusing on increasing the value of its Gold subscription service by offering a 4.9% APY on uninvested cash and a 3% match on IRA contributions. These enhancements have significantly grown Gold subscriptions, with over 1.3 million subscribers to date.
Furthermore, the company’s emphasis on cost reduction and operational efficiency has also led to a substantial increase in profitability, with adjusted EBITDA growing nearly triple year-over-year to $137 million, representing a 29% margin.
Robinhood is also expanding its geographic footprint, making its third attempt to enter the U.K. market. This move comes after the U.K.’s Financial Conduct Authority established new guidelines for strengthening consumer protection in crypto asset marketing.
If HOOD can garner a similar userbase in the UK and other regions to what it has in the U.S., it could be one of those dominant apps used for buying and trading stocks worldwide, which makes it one of those fintech disruptors.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.
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