Many fintech stocks have been severely affected by the current stock market decline. The decrease has been particularly severe for growth stocks, and most fintech falls into this group. The fintech business has a great deal of long-term potential. Thus, it may be a good moment to seek for reputable companies to keep for the long run. Consequently, you can read the details of five fintech stocks that might be excellent portfolio additions in this article.
Block (NYSE: SQ)
The first fintech stock to watch in 2022 is Block. Block’s product portfolio has expanded from a method for retailers to take credit cards using their mobile phones to a large-scale financial ecosystem for consumers and small companies. The company handles card payments at an annual pace of over $100 billion. It just formed its banking subsidiary (Square Financial Services). Moreover, it has a flourishing small business financing platform. In addition, Square has just joined the buy-now, pay-later loan market by acquiring Afterpay.
In addition, two significant components of Square’s business are very attractive. First is its Cash App, which has 44 million active monthly users and nearly limitless expansion possibilities for Square’s consumer financial services. The website already provides direct payments, debit cards, the option to purchase and sell Bitcoin (CRYPTOCURRENCY: BTC), and a user-friendly interface for trading stocks. Second is Square Online, the version of the business’s merchant platform that enables retailers to have an omnichannel presence, which might be an excellent opportunity for the company to capitalize on the rise in e-commerce use.
PayPal (NASDAQ: PYPL)
The second fintech stock to watch in 2022 is PayPal. PayPal Holdings is the uncontested leader in online payment processing, but it is much more. Its Venmo peer-to-peer payment program has emerged as an industry leader. Moreover, its vast user base continues to grow at a dizzying rate. In addition, PayPal has also acquired related firms, such as the e-commerce tool Honey, and invested in various other successful companies, including MercadoLibre (NASDAQ: MELI), Uber (NYSE: UBER), and others. PayPal has the financial freedom to embrace opportunities as they occur due to its quarterly free cash flow generation of more than $1 billion.
There are 429 million active PayPal accounts in more than 200 countries. PayPal is doing an excellent job of determining how to improve the monetization of its user base, even though user growth has halted recently. In a word, this is the industry leader in terms of profitability, and there is no reason to expect it to change soon.
Goldman Sachs (NYSE:GS)
The third fintech stock to watch in 2022 may first sound unusual. Many people associate Goldman Sachs with traditional Wall Street business practices, the opposite of fintech innovation. Goldman Sachs has nonetheless made it plain that consumer banking will play a significant role in the company’s future objectives. It has taken significant measures to convert from an investment bank and wealth manager for the top one percent into a full-service consumer bank.
The first component, the Marcus savings and personal loan platform has become tremendously successful in just a few years. The company entered the credit card sector in 2019 as the exclusive issuer of Apple’s (NASDAQ: AAPL) credit card and has subsequently become a credit card partner for General Motors (NYSE: GM). Recently, the Marcus Invest platform with automated investing portfolios was introduced. Moreover, Goldman is expanding its consumer business in a very fintech manner, with no expensive branch network to worry about and a tech-centric strategy to optimize efficiency and consumer value. Significantly, unlike most other fintech, Goldman’s big investment banking division tends to do better in volatile markets. Therefore, this makes its stock less cyclical.
The second fintech stock to watch in 2022 is Adyen. Adyen is not a familiar brand among most U.S. investors, yet it deserves to be mentioned alongside Block and PayPal. Adyen, headquartered in the Netherlands, provides payment processing solutions to businesses and operates globally. It provides payment options for offline, internet, and mobile platforms. Unlike other big payment processing technology companies, however, Adyen concentrates nearly solely on serving large enterprises. Microsoft (NASDAQ: MSFT), Uber (NYSE: UBER), and McDonald’s (NYSE: MCD) rely on Adyen for their payment needs, to mention a few. Several years ago, eBay no longer utilized PayPal as its primary payment processor. Thus, this was Ayden’s advantage.
Significantly, in 2021, Adyen will process more than $540 billion in payment volume. Adyen’s growth has been spectacular, and the company will handle more than $540 billion in payment volume in 2021. In addition, Adyen is very lucrative, with an EBITDA margin of 63%, which might improve as the firm grows.
The last fintech stock to watch in 2022 is MercadoLibre. MercadoLibre is sometimes referred to as the Amazon.com (NASDAQ: AMZN) of Latin America. The company’s e-commerce sector has more than $30 billion in annual retail sales volume. Moreover, it continues to expand at an exceptional rate. In recent years, the company’s logistics platform (Mercado Envios) and financing business (Mercado Credito) has acquired significant popularity.
From a fintech standpoint, the most intriguing payment platform is Mercado Pago. The company processes more than $100 billion in yearly payment volume and is expanding at a far higher rate than the e-commerce market. Most promising is that MercadoPago is expanding faster than MercadoLibre’s e-commerce platform when it comes to payment processing.
To sum up, fintech stocks are very worth investing in. The Fintech Market is currently projected to be worth over $6.5 trillion, and investments in fintech are increasing exponentially. In fact, according to the 2020 Global COVID-19 FinTech Market Rapid Assessment Study, the World Bank highlighted the impressive resilience of the Fintech sector to COVID-19 and how the business thrived despite a scenario of collapsing economies and a deteriorating global environment. Thus, fintech firms are the focal point of international investors, from the rise of Fintech Unicorns to the rising interest in Defi.