Financial technology, or fintech, has ushered in a new era in banking and finance, exploiting artificial intelligence (AI), blockchain, and many other advanced technologies. Fintech has issued a challenge to traditional banks by focusing on technology and customer experience. It has endless applications in areas such as cryptocurrency, mobile banking, and investment platforms.
In addition, fintec has the potential of tapping into unbanked and underbanked communities in rural areas, where traditional banking facilities are hard to establish. In the United States, mobile payments are set to reach $125 billion in 2025. The global fintech market is expected to grow at a 23.4% CAGR to a $324 billion market value by 2026.
Given the industry’s growth prospects, Wall Street analysts expect fintech stocks UP Fintech Holding Limited (TIGR), Mogo Inc. (MOGO), and Elevate Credit, Inc. (ELVT), which are currently trading at less than $10, to rally more than 55% in price in the near term.
UP Fintech Holding Limited (TIGR)
TIGR provides online brokerage services to Chinese investors. The company offers a brokerage platform that allows investors to trade stocks, warrants, and other financial instruments, and can be accessed through the company’s app and website. It is based in Beijing, China.
On November 5, TIGR announced that its Singapore-based subsidiary, Tiger Brokers (Singapore) Pte. Ltd., had received approval to be a trading member of Singapore Exchange Securities Trading Limited and Singapore Exchange Derivatives Trading Limited. The company expects these developments will help improve its client services.
In October, the company acquired Ocean Joy Securities Limited, a Hong Kong Securities and Futures Commission licensed firm. This should strengthen TIGR’s presence in Hong Kong.
For its second fiscal quarter, ended June 30, TIGR’s total revenues increased 98.7% year-over-year to $60.23 million. This can be attributed to a 63.7% rise in revenue from commissions to $30.94 million versus the prior-year quarter. After interest expenses, its total net revenues improved 95% from the same period last year to $55.40 million.
A $0.48 consensus EPS estimate for the current year (fiscal 2021) indicates a 220% year-over-year increase. Likewise, the $257.15 million consensus revenue estimate for the current year reflects an 85.7% improvement from the prior year.
The stock has gained 22.2% in price over the past year and 10.2% over the last five days to close yesterday’s trading session at $7.28.
TIGR’s $18.22 12-month median price target indicates a 150.3% potential upside.
Mogo Inc. (MOGO)
Based in Vancouver, Canada, MOGO operates internationally as a financial technology company, providing digital solutions to customers that improve their financial health. It also operates a digital payments platform.
On November 9, MOGO and financial services company Sun Life Financial Inc. (SLF) announced a pilot to bring MOGO’s saving and investing app, Moka, to SLF members in expectation of increasing members’ savings.
On November 8, the company declared its new business rewards program, enabling merchants to offer MOGO’s ‘Green’ bitcoin rewards to customers. Regarding the program , Phil Barrar from MOGO said, “This kind of rewards program can work within a business’s existing rewards program and potentially help drive long-term financial benefit to their customers.”
MOGO’s revenues increased 58% year-over-year to CAD15.44 million ($12.32 million) in its fiscal third quarter, ended September 30. Its gross profit improved 33.6% from the same period last year to CAD12.18 million ($9.72 million). Its cash and cash equivalent balance for the period came in at CAD45.58 million ($36.36 million), up 362.5% from the prior-year quarter.
Analysts expect MOGO’s EPS to improve 19.6% year-over-year in the next year (fiscal 2022). The Street expects its revenue to increase 35.5% from the current year to $60.60 million in the following year.
MOGO’s stock has gained 208.6% in price over the past year to close yesterday’s trading session at $5.74. It has gained 52.3% year-to-date.
A $12.50 12-month median price target indicates a 117.8% potential upside. The price targets range from a high of $13.00 to a low of $12.00.
Elevate Credit, Inc. (ELVT)
ELVT is an online credit-solutions provider to non-prime customers in the United States. Its offerings include online installment loans, lines of credit, and credit cards. The company is based in Fort Worth, Tex.
On October 13, ELVT announced its establishment of a $50 million financing facility, with the scope of being increased to $100 million, to fund the growth of its credit-constrained customer catering Today card product. The Today card is widely demanded and has been the fastest-growing brand over the last 12 months. Thus, the credit facility to fund the continued growth of the Today Card should be beneficial for the company.
In July, ELVT launched permanent payment assistance tools for non-prime customers, with services such as deferment options, interest rate reductions, and zero late fees. This should enhance customers’ experience.
For its fiscal third quarter, ended September 30, ELVT’s revenue increased 19.8% year-over-year to $112.84 million. Its total operating expenses declined 4.2% from the prior-year quarter to $40.87 million.
The Street expects ELVT’s EPS to increase 223.8% year-over-year to $0.52 next year (fiscal 2022). Likewise, a 588.70 million the consensus revenue estimate for the coming year indicates a rise of 42.7% from the current year.
The stock has gained 24% in price over the past year and 2.2% over the past five days to close yesterday’s trading session at $3.46.
ELVT’s 12-month median price target of $5.50 reflects a 59% potential upside.
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TIGR shares were trading at $6.85 per share on Wednesday afternoon, down $0.43 (-5.91%). Year-to-date, TIGR has declined -13.73%, versus a 26.44% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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