Fintech Revolution: 2 Powerhouse Stocks to Watch
The financial technology (fintech) sector is on a tear, with estimates suggesting it could reach a staggering $1.5 trillion in sales by 2030. As companies scramble to stay ahead of the curve, two fintech leaders are poised to reap the benefits: Sofi Technologies (NASDAQ: SOFI) and PayPal (NASDAQ: PYPL).
Sofi Technologies: A Fintech Powerhouse
Sofi Technologies has experienced remarkable growth, expanding its services to include loans, investing, checking and savings accounts, loan refinancing, credit cards, and even estate planning. The company’s membership base has skyrocketed, increasing from 1 million in 2020 to over 10 million today – a 9x jump in just five years. This growth has translated into impressive financial results, with sales rising 30% to $697 million in the third quarter of 2024 and adjusted EBITDA jumping 90% to $186.2 million.
A Premium Stock with Long-Term Potential
Sofi’s stock has seen a massive surge, rising 137% over the past six months. While its forward P/E ratio of 74 may seem steep, starting a small position could be a smart move for long-term investors looking to tap into the fintech boom.
PayPal: A Hidden Gem
PayPal is often overlooked in the fintech space, but this giant has plenty of room for growth. Its person-to-person payment app, Venmo, is a prime example of the company’s willingness to innovate. With an estimated 88 million users, Venmo is one of the leading payment apps. PayPal’s revenue rose 6% to $7.8 billion in the third quarter of 2024, while non-GAAP earnings spiked 22% to $1.20 per share.
A Value Play with Room to Grow
PayPal’s shares have a forward P/E ratio of just 17.8, making it a more affordable option compared to Sofi Technologies. With 432 million global users and a 9% increase in total payment volume in Q3, PayPal is well-positioned for continued growth.
Investing in Fintech: A Word of Caution
While fintech stocks can be volatile, starting with a small position and gradually adding to it over time can help mitigate risk. Before investing in Sofi Technologies or PayPal, consider doing your research and building a diversified portfolio.
Expert Insights: 10 Top Stocks to Buy Now
The Motley Fool’s Stock Advisor analyst team has identified 10 top stocks with monster return potential. While Sofi Technologies didn’t make the cut, these expert picks could provide valuable guidance for investors looking to tap into the fintech boom.
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