Fintech Stocks: Promising Signals as Economy Stabilizes

Fintech stocks are showing signs of recovery as interest rates decline. Investors are advised to consider nibbling on these stocks before the market warms up again.

Date: 18-01-2025

AI Rating: 7

Market Overview
The report discusses the fluctuating fortunes of several fintech companies and highlights that many of them are still trading below their all-time highs despite recent rebounds. The macroeconomic headwinds, including inflation and rising rates, had previously challenged these stocks but there's optimism as the market stabilizes.

SoFi Technologies
SoFi has experienced remarkable growth, evidenced by its adjusted revenue which soared at a CAGR of 49% from $621 million in 2020 to $2.07 billion in 2023. The company's adjusted EBITDA has turned positive since 2021, reaching $432 million in 2023 with an extraordinary CAGR of 279%. Analysts project a continued upward trajectory with revenue and adjusted EBITDA anticipated to rise at CAGRs of 19% and 46%, respectively, from 2023 to 2026. These factors suggest a very positive outlook for SoFi, indicating strong potential for stock price appreciation.

Upstart
Upstart has faced significant challenges due to rising interest rates, which drastically affected its loan originations—plummeting by 59% in 2023. However, with a shift towards declining interest rates, its business is showing signs of recovery. The revenue is expected to rise at a CAGR of 28% over the next two years, indicating that investors could see improvements in stock prices if these trends continue. Nevertheless, the adjusted EBITDA turned negative in 2023, which may raise some concerns for investors.

PayPal
PayPal is on a recovery path with a slight year-over-year growth in active accounts and an increase in total payment volume (TPV) of 11% in the first nine months of 2024. Analysts predict a steady revenue and EPS growth of 6% and 11%, respectively, from 2023 to 2026. PayPal’s cost-cutting measures and share buybacks are likely to enhance profitability, presenting a positive outlook for stock performance.

Stocks: SOFI UPST PYPL