As the markets grappled with inflation and rising interest rates last year, fintech valuations fell. Here is a collection of fintech stocks to watch in 2024 amid a potential sector recovery.
- Block launched its self-custody bitcoin wallet, Bitkey, in over 95 countries in December.
- PayPal has unveiled AI-based products, including AI personalisation.
- nCino has extended a long-standing partnership with Salesforce to 2031.
Block
The Bitcoin Wallet Stock
Block [SQ] launched its self-custody bitcoin wallet, Bitkey, in December, opening up preorders in over 95 countries. Bitkey features a smartphone app and hardware device along with recovery tools in case a user loses either or both. “The bitcoin decentralised payments network has the potential to create a more inclusive financial system for all, especially those who have traditionally been underserved,” said Thomas Templeton, who led the Block team that built the product, in a press release. The Block share price is down 22.5% in the 12 months through 29 January.
PayPal
The AI Personalisation Stock
PayPal [PYPL] CEO Alex Chriss, who took the helm last September, told CNBC in his first interview on 17 January that the fintech will “shock the world”. The company has been slow to innovate, Chriss added, but emphasised the value PayPal can offer with its vast stores of data: “We have over 35 million merchants using PayPal. When we improve their conversion rate, it improves their business [and] it improves our bottom line.” Six new innovations were announced on 25 January, including a platform that leverages AI to help merchants reach new customers.
nCino
The SaaS Partnership Stock
nCino [NCNO] announced at the end of December that it had extended a partnership with Salesforce [CRM], which first started back in 2011, until 2031. The extension will allow for deeper integration of nCino’s platform with Salesforce’s AI and automation products. According to nCino Chairman and CEO Pierre Naudé in a 21 December press release, the partnership “has enabled nCino to transform the financial services industry by providing industry-specific solutions that drive efficiencies, deliver intelligence, and help institutions modernize for a more agile future”.
Intuit
The FTC Ruling Stock
The US Federal Trade Commission (FTC) has ordered Intuit [INTU] to stop pushing its popular TurboTax software. In a report on 22 January, the regulator alleged that the company’s “ubiquitous advertisements touting their supposedly ‘free’ products … mislead consumers into believing that they can file their taxes for free”. Investors were clearly undeterred by the news as the Intuit share price climbed 3.1% last week. The company issued a response to the FTC indicating it “expects no significant impact to its business”.
Bread Financial
The Revenue Warning Stock
Bread Financial [BFH] swung to a net profit in Q4 2023, but warned of lower consumer spending and widening credit losses in 2024. Reporting earnings before the market opened on 25 January, the company also said that the Consumer Financial Protection Bureau’s plan to rein in late credit card fees could impact revenue. Total revenue for this year is expected to be “down low- to mid-single digits” compared with last year. Investors reacted positively to the results, however, with the Bread Financial share price up 16.3% since the report.
Another Way to Invest in Fintech
The Global X FinTech ETF [FINX] holds Intuit, PayPal, Block and nCino as of 26 January. As of 31 December, 51.5% of the portfolio is allocated to information technology and 39.6% to financials; industrials, communications services and healthcare all have weightings under 5%. The fund is up 9.4% in the past year through 29 January and up 11.4% in the past six months.
The Amplify Mobile Payments ETF [IPAY] holds Block, PayPal and Bread Financial as of 29 January. As of 31 December, 80.6% of the portfolio is allocated to transaction and payment processing and 15% to consumer finance; application software and electronic equipment + instruments have respective weightings of 3% and 0.5%. The fund is up 3.9% in the past year and up 3.5% in the past six months.
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