Financial technology (fintech) is a rapidly growing sector of the broader financial sector, and the revenues generated by companies in this space can be enormous. Boston Consulting Group estimates that the global fintech market will reach $1.5 trillion in sales by 2030.
This is just an estimate, of course, but it’s a good indicator of why companies are competing to be at the forefront of new technology. fintech Services. Two of these companies are already well positioned to benefit from the growth of fintech Sufi techniques (Nasdaq: SOFI) and PayPal (NASDAQ: PYPL). This is why.
SoFi has expanded rapidly over the years, adding new financial services and offerings that now include loans, investing, checking and savings accounts, loan refinancing, credit cards, and even estate planning.
To put SoFi’s growth in perspective, consider that the company had more than 1 million members at the beginning of 2020. In December, it announced that it now has more than 10 million Members – Increased membership 9x in just five years.
SoFi’s strong membership base has translated into impressive financial results. The company increased its sales by 30% in the third quarter of 2024 to $697 million, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 90% to $186.2 million.
SoFi stock has seen a massive rise over the past six months, rising 137% as of this writing. The gains have pushed up the premium on SoFi shares, which now have a price-to-earnings (P/E) of 74. That’s expensive by any standard, but starting with a small position could be smart for long-term investors who want to own a piece of the fintech leader.
Some investors may overlook PayPal when looking for fast-growing fintech companies, but this big fintech player likely has more growth to come. The company’s peer-to-peer payment app, Venmo, is a great example of how PayPal is willing to look into new areas of growth. Venmo is one of the leading payment apps, with an estimated 88 million users, compared to 52 million in 2020.
PayPal’s revenue rose 6% in the third quarter of 2024 to $7.8 billion, and its non-GAAP earnings rose 22% to $1.20 per share. It also ended the quarter with free cash flow of $1.4 billion and $16.2 billion in cash and cash equivalents.
The company’s 432 million global users are a testament to PayPal’s leading position in the fintech space. The 9% increase in total payment volume in the third quarter, to $422.6 billion, proves that the company knows how to convince its users to continue using its payment platforms.
Investors looking for a good deal and cheaper fintech stocks than SoFi would be wise to consider PayPal now. The company’s shares have a forward P/E ratio of just 17.8, well below Standard & Poor’s 500 Average 23.7.
It is worth noting that fintech stocks can be volatile at times, so if you are new to this investment sector, it is best to start with a small position and then slowly add to it over time.
Before you buy shares in SoFi Technologies, consider the following:
the Motley Fool stock advisor The analyst team has just defined what they think it is Top 10 stocks Let investors buy it now… and SoFi Technologies wasn’t one of them. The 10 stocks that were discounted could deliver huge returns in the coming years.
Think when Nvidia I prepared this list on April 15, 2005… If you invested $1,000 at the time of our recommendation, You will have $858,668!*
Stock advisor It provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. the Stock advisor The service has More than four times The return of the S&P 500 since 2002*.
*Stock Advisor returns as of January 6, 2025
Chris Snow He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: long $42.50 January 2027 calls on PayPal and short $85 March 2025 calls on PayPal. The Motley Fool has Disclosure policy.
2 Best FinTech Stocks to Buy in January Originally published by The Motley Fool