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On Wall Street, “strength begets strength.” Despite the recent market correction and the volatility caused by the “Yen Carry Trade” unwind, the fintech and payments group has exhibited stellar relative strength recently. Over the past three months, PayPal,Affirm and Upstart have each outperformed the S&P 500 Index ETF dramatically, gaining 15.5%, 26.4%, and 83.5% (compared to the SPY’s 6.7%).
The “buy now, pay later” (BNPL) segment of the market is uniquely positioned to do well in the current economic environment due to upcoming interest rate cuts (which will reduce costs) and a consumer who is strapped for cash.
Last night, AFRM beat earnings on the top and bottom lines. AFRM reported EPS of $-0.14, which handily beat Zacks Consensus Estimates of $-0.45.
The news driving the stock today is that the company raised FY25 guidance and expects to achieve GAAP profitability in fiscal Q4 of 2025. Early Tuesday, shares were higher by a healthy 20%. However, the price explosion may just be the start as shares break out of a long price channel.
Another interesting tidbit from AFRM’s investor presentation last night is that more than 20% of its gross merchandise value (GMV) for its BNPL services are coming from areas the company historically did not address, such as wholesale clubs like Costco and home improvement stores like Home Depot.
A recent study conducted by the Federal Reserve Bank of Philadelphia indicated that some 33% of Americans earnings six-figure incomes are concerned about meeting their financial obligations. Since the average American does not earn six figures, this is cause for concern.
UPST is a leading cloud-based lender powered by artificial intelligence (AI) and machine learning. The company’s unique algorithms allow it to lend to a wider range of people, while still properly assessing credit risk. Shares exploded by some 40% earlier this month after the company reported better-than-expected EPS. Meanwhile, several Wall Street analysts tracked by Zacks Investment Research have warmed up on the stock and revised their EPS estimates higher for the coming quarters.
PayPal is an established player in the industry and is one of the largest online payment solutions providers. The company’s peer-to-peer payment service, Venmo, is the key catalyst behind its growth. Venmo allows family and friends to transfer money seamlessly through their mobile devices. However, the real growth is yet to come. Venmo users can now pay at more than two million merchants thanks to partnerships with credit card kingpins Visaand Mastercard.
PYPL shares are responding to the anticipated growth by breaking out of a base structure after a long slumber. Finally, a historically low valuation adds to the bullish picture.
Conclusion
New economy fintech and payment stocks exhibit strong growth and bullish prospects. Affirm’s bullish earnings report last night should bolster this market segment further into 2025.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: PayPal, Affirm, Upstart and S&P 500 Index ETF
For Immediate Release
Chicago, IL – August 30, 2024 – Today, Zacks Investment Ideas feature highlights PayPal (PYPL - Free Report) , Affirm (AFRM - Free Report) , Upstart (UPST - Free Report) and S&P 500 Index ETF (SPY - Free Report) .
3 FinTech Stocks to Buy: AFFM, UPST, PYPL
On Wall Street, “strength begets strength.” Despite the recent market correction and the volatility caused by the “Yen Carry Trade” unwind, the fintech and payments group has exhibited stellar relative strength recently. Over the past three months, PayPal, Affirm and Upstart have each outperformed the S&P 500 Index ETF dramatically, gaining 15.5%, 26.4%, and 83.5% (compared to the SPY’s 6.7%).
The “buy now, pay later” (BNPL) segment of the market is uniquely positioned to do well in the current economic environment due to upcoming interest rate cuts (which will reduce costs) and a consumer who is strapped for cash.
Affirm (AFRM - Free Report) Beats Earnings as BNPL Gains Momentum
Last night, AFRM beat earnings on the top and bottom lines. AFRM reported EPS of $-0.14, which handily beat Zacks Consensus Estimates of $-0.45.
The news driving the stock today is that the company raised FY25 guidance and expects to achieve GAAP profitability in fiscal Q4 of 2025. Early Tuesday, shares were higher by a healthy 20%. However, the price explosion may just be the start as shares break out of a long price channel.
Another interesting tidbit from AFRM’s investor presentation last night is that more than 20% of its gross merchandise value (GMV) for its BNPL services are coming from areas the company historically did not address, such as wholesale clubs like Costco and home improvement stores like Home Depot.
Upstart Holdings (UPST - Free Report) : An AI-Based Lender
A recent study conducted by the Federal Reserve Bank of Philadelphia indicated that some 33% of Americans earnings six-figure incomes are concerned about meeting their financial obligations. Since the average American does not earn six figures, this is cause for concern.
UPST is a leading cloud-based lender powered by artificial intelligence (AI) and machine learning. The company’s unique algorithms allow it to lend to a wider range of people, while still properly assessing credit risk. Shares exploded by some 40% earlier this month after the company reported better-than-expected EPS. Meanwhile, several Wall Street analysts tracked by Zacks Investment Research have warmed up on the stock and revised their EPS estimates higher for the coming quarters.
PayPal’s (PYPL - Free Report) Venmo Drives Earnings
PayPal is an established player in the industry and is one of the largest online payment solutions providers. The company’s peer-to-peer payment service, Venmo, is the key catalyst behind its growth. Venmo allows family and friends to transfer money seamlessly through their mobile devices. However, the real growth is yet to come. Venmo users can now pay at more than two million merchants thanks to partnerships with credit card kingpins Visaand Mastercard.
PYPL shares are responding to the anticipated growth by breaking out of a base structure after a long slumber. Finally, a historically low valuation adds to the bullish picture.
Conclusion
New economy fintech and payment stocks exhibit strong growth and bullish prospects. Affirm’s bullish earnings report last night should bolster this market segment further into 2025.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.