Fintech has brought about major changes in the way the financial industry operates. The fintech industry has played a significant role in bridging the gap between the banked and the underbanked or unbanked people. The rising remote financial activities have given a solid boost to the fintech industry since the onset of the COVID-19 pandemic.
The innovations brought about by fintech companies have helped to cut down transaction costs of financial services and meet financial needs remotely. According to a Kenneth Research report, the global fintech market is expected to reach $305.7 billion by 2023, growing at a CAGR of 22.2%.
Given this backdrop, it could be wise to add fundamentally sound fintech stocks Affirm Holdings, Inc. (AFRM), Open Lending Corporation (LPRO), and Green Dot Corporation (GDOT) to your watchlist. These stocks have witnessed a decline in 2021, but Wall Street analysts expect them to soar more than 45% in the upcoming months.
Affirm Holdings, Inc. (AFRM)
AFRM provides digital and mobile commerce platforms by enabling a technology-driven payments network through partnerships with banks. A consumer can use the company’s platform by selecting their repayment option while the loans are funded and issued by its bank partner. Its platform has three elements: a point-of-sale payment solution, merchant commerce solutions, and consumer-focused applications.
On November 1, 2021, AFRM announced its partnership with ACI Worldwide, Inc. (ACIW), which provides real-time digital payment software and solutions for U.S. merchants. This partnership will now allow customers to make purchases with AFRM from U.S. merchants using the ACI Secure eCommerce and pay-over-time without any late or hidden fees. This partnership will enable AFRM to gain market share in the rapidly growing buy now, pay later (BNPL) market.
AFRM’s Gross Merchandise Volume (GMV) for the fiscal first quarter ended September 30, 2021, increased 84% year-over-year to $2.70 billion. The company’s total revenue increased 55% year-over-year to $269.40 million. Its active consumers increased 124% year-over-year to 8.70 million.
Analysts expect AFRM’s EPS and revenue for the quarter ending March 31, 2022, to increase 67.9% and 63.9% year-over-year to $0.34 and $324.85 million. Over the past month, the stock has lost 20.6% to close Friday’s trading session at $100.56. However, Wall Street analysts expect the stock to hit $168.55 in the near term, indicating a potential upside of 67.6%.
Open Lending Corporation (LPRO)
LPRO provides loan analytics, risk-based loan pricing, risk modeling, and automated decision technology for automotive lenders throughout the United States. The company provides lending enablement and risk analytics to credit unions, regional banks, and the captive finance companies of original equipment manufacturers.
For the fiscal third quarter ended September 30, 2021, LPRO’s total revenue increased 97.6% year-over-year to $58.90 million. The company’s net income came in at $29.40 million, compared to a net loss of $71.10 million. Its adjusted EBITDA increased 112.6% year-over-year to $42.10 million.
For fiscal 2021, analysts expect LPRO’s EPS and revenue to increase 200% and 90.4% year-over-year to $1.09 and $207.38 million, respectively. The stock has lost 48% over the past six months to close Friday’s trading session at $22.48. However, Wall Street analysts expect the stock to hit $38.57 in the near term, indicating a potential upside of 71.5%.
Green Dot Corporation (GDOT)
GDOT is a financial technology and bank holding company focused on making money and money movement accessible for all. The company operates in consumer, B2B, and money movement services segments.
On September 2, 2021, GDOT announced its research initiative in collaboration with Gig Wage. The latest research will be led by a national non-profit Commonwealth aimed at addressing the financial insecurity of the fast-growing non-traditional workforce. The research aims to test the types of financial products that best support non-traditional “gig” workers and which tools and resources can have the biggest impact on income sufficiency and stability in their lives.
GDOT’s non-GAAP operating revenues for the fiscal third quarter ended September 30, 2021, increased 18% year-over-year to $328.90 million. The company’s adjusted EBITDA came in at $46.20 million, representing an increase of 37% year-over-year. Its non-GAAP net income increased 74% year-over-year to $24 million.
Analysts expect GDOT’s EPS for the quarter ending March 31, 2022, to increase 22.9% year-over-year to $1.02. Its revenues for fiscal 2021 are expected to increase 15.2% year-over-year to $1.38 billion. It surpassed Street EPS estimates in three of the trailing four quarters. Over the past year, the stock has lost 35% to close Friday’s trading session at $36.24. However, Wall Street analysts expect the stock to hit $53.75 in the near term, indicating a potential upside of 48.3%.
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AFRM shares were trading at $95.62 per share on Monday afternoon, down $4.94 (-4.91%). Year-to-date, AFRM has declined -1.67%, versus a 29.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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