Best fintech stocks to invest in 2024: Reviewed by Digimagg
Explore the top fintech stocks for investment.
Fintech, short for financial technology, represents the expanding realm of companies leveraging technology to streamline and automate financial services for both businesses and consumers. This expansive domain encompasses various innovations, ranging from artificial intelligence (AI) to applications, algorithms, and software. Some of these companies stand out as prominent investment opportunities.
According to a joint report by Boston Consulting Group and QED Investors, revenues within the fintech sector are projected to surge from $245 billion to $1.5 trillion by 2030, constituting a quarter of all banking valuations by that period. In this guide, we evaluate ten of the top fintech stocks currently available.
Best fintech stocks to buy in 2024
Here's a brief overview of the top fintech stocks currently worth considering:
- Marathon Digital: This U.S.-based digital asset technology firm specializes in cryptocurrency mining and plays a pivotal role in supporting and securing the Bitcoin ecosystem. It achieved profitability milestones in 2023.
- StoneCo: A Brazilian company renowned for its cloud-based technology platform facilitating electronic payments and automating point-of-sale operations for businesses.
- MercadoLibre: The largest e-commerce and payments ecosystem across Latin America, witnessing a remarkable 73% surge in revenue for its digital payment platform, Mercado Pago, in the previous year. Its user base exceeds 50 million.
- Block: A U.S.-based company, co-founded by Twitter's Jack Dorsey and formerly known as Square, offering a diverse range of services including mobile payments, financial solutions, and point-of-sale software and hardware.
- Affirm Holdings: A prominent U.S.-based consumer financing enterprise, established by PayPal co-founder Max Levchin, recognized as a frontrunner in the buy-now, pay-later market segment.
Best fintech stocks to invest
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This cryptocurrency mining corporation, whose stock soared by 187% in the previous year, is reaping the rewards of Bitcoin's resurgence and achieved profitability in the third quarter of 2023. The company experienced an exceptional fourth quarter last year, mining 4,242 bitcoins, surpassing the 4,144 bitcoins mined throughout the entirety of 2022.
In the fourth quarter, Marathon recorded $156.8 million in revenue, marking a substantial 452% surge compared to the previous year. This growth was primarily fueled by a 172% increase in bitcoin production from the preceding year. Furthermore, the average price of Bitcoin witnessed a remarkable 101% increase year-over-year. During this period, net income amounted to $151.8 million, translating to earnings per share (EPS) of $0.67. This stands in stark contrast to the loss of $391.6 million, or a loss per share of $3.13, reported in the same quarter of the previous year.
Growth potential Focus on regulatory compliance Scale and operational efficiency Strategic partnerships and investments Strong position in a growing industry.png)
Energy consumption and environmental concerns
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The stocks of this Brazilian company, which assists entrepreneurs and small businesses in Latin America's largest economy, surged by over 80% in the previous year. CEO Pedro Zinner announced in November that the company anticipates increasing net profit by eightfold by the conclusion of 2027, primarily through the integration of its financial services and software ventures.
The anticipated increase in Brazil's population coupled with the relatively low adoption of StoneCo.'s services suggests ample room for growth, estimated at a compound annual growth rate (CAGR) of 13% over the next four years. It appears to offer the highest growth potential among fintech stocks.
Diverse product offerings Technology-friven solutions Strong market position in Brazil Technology-driven solutions Growth in digital payments Currency fluctuations Economic and political risks in Brazil
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MercadoLibre's stocks, belonging to one of Latin America's most esteemed companies with a market capitalization of $78 billion, have appreciated by almost 30% in the past twelve months. Despite being recognized for its e-commerce endeavors, approximately half of its revenue is derived from financial activities, encompassing interest earned on installment payments, payment processing services, and credit card operations.
The company, headquartered in Montevideo, Uruguay, has remained profitable for the past two years and continues to expand its customer base, primarily in Brazil, with its most rapid growth occurring in Mexico. The user count for its payment service, Mercado Pago, surpassed 50 million by the end of 2023.
Network effects Strong growth potential Innovation and technology Diversified business model Dominant market position Regulatory risks Logistics challenges Currency fluctuations
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Previously recognized as Square, this company offers merchants an extensive commerce ecosystem and has demonstrated ongoing evolution, contributing to its sustained success. It remains a top contender among fintech stocks for investment. The resurgence of Bitcoin is also bolstering the company, given its significant investments in Bitcoin and blockchain technology.
Block operates two primary businesses: Square, a point-of-sale solution for small businesses, and Cash App, a mobile money transfer and financial services application. In 2023, the company generated revenue of $12.42 billion, marking a 19% increase year over year. Gross profit, the company's preferred metric for profitability, reached $2.03 billion in the fourth quarter, reflecting a 22% rise compared to the previous year. For the entire year, gross profit climbed by 25% from the preceding year to $7.50 billion, with $3.1 billion stemming from Square and $4.3 billion from Cash App.
Expanding ecosystem High growth potential Diversified product portfolio Strong brand and market presence Regulatory risks Intense competition Bitcoin volatility Dependence on transaction volume
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The company is experiencing significant growth, partly due to its role in boosting sales for retail businesses. Affirm is a fintech entity worth monitoring, as it has reported that merchants utilizing its services witnessed a 60% increase in cart sizes during 2022 and 2021.
One of the most compelling reasons to consider Affirm is its appeal to younger consumers. Its interest-free loans have gained popularity, particularly amidst rising prices and interest rates associated with traditional loans.
Growing BNPL market High consumer demand Strong market position in BNPL Technology and data analytics Credit risk Intense competition Profitability challenges Reliance on consumer spending
Where can one purchase leading fintech stocks?
After pinpointing the top fintech stocks for investment, you'll require an online brokerage platform to acquire shares.
eToro stands out as one of the premier options for purchasing fintech stocks. With eToro, you have access to a diverse array of tech stocks from various regions, including the US, Europe, and beyond, all with zero commission fees, making it one of the most competitive trading platforms available.
eToro provides trading opportunities for almost all of the highlighted fintech stocks mentioned earlier, along with a wide selection of others. Additionally, it offers trading for fintech-focused ETFs such as the ARK FinTech Innovation ETF, which enables exposure to multiple fintech companies through a single investment.
For those uncertain about which fintech stocks to invest in, eToro offers helpful tools. Investors can easily determine whether others are buying or selling shares of any given company. Furthermore, the broker furnishes market news headlines for each stock, allowing investors to stay informed about product launches, earnings reports, and other developments.
Moreover, eToro offers the option of copy trading, where investors can replicate the portfolios of other tech investors. When an investor being copied buys or sells shares, the corresponding actions are mirrored in the copier's portfolio. eToro hosts numerous copy portfolios focused on tech and fintech stocks, and there are no fees associated with copy trading.
eToro is regulated in the US and many other leading Western nations, and its services are accessible in over 100 countries.
| Available assets | 5,000+ |
| Pricing system | No commission fees for trading shares. |
| Fee for investing in Apple stock | None |
| Minimum deposit | $100 (country dependent) |
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| Pros | Cons |
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What is the process for selecting the most suitable fintech stocks for investment?
Analyzing fintech stocks using conventional metrics can be challenging. Many fintech stocks are categorized as growth stocks and may not yet be profitable, making metrics like net income or EPS less useful, particularly for long-term investors.
Evaluate sales volume growth
Assess fintech stocks demonstrating robust growth in customer acquisition or user engagement by examining metrics such as total payment volume (TPV) or monthly active user growth. Additional indicators to monitor growth include app downloads and average revenue per client.
Compare against competitors
Compare a company's revenue growth and profit margins with similar fintech firms. Even with unprofitable companies, it's valuable to evaluate the price-to-book (P/B) ratio in relation to other players in the fintech sector.
Adopt a global perspective
Some of the fastest-growing fintech firms operate in regions underserved by traditional banking and financial services. Consider investing in fintech companies based in Latin America, Africa, and Asia to diversify your portfolio.
Assess competitive landscape
Evaluate the strength of a company's competitive position compared to its peers. Determine if it leads in its niche or if it's a challenger seeking to gain traction. Given fintech's competitive nature, it's essential for companies to carve out a distinct niche that shields them from competitors. Leadership in a specific fintech sector can provide a competitive advantage.
Consult fintech rankings
Utilize fintech rankings from various sources, such as AltIndex, which assesses fintech companies based on diverse metrics like AI scores and other data points.
Where can one obtain recommendations and insights on fintech stocks?
For further guidance on selecting fintech stocks, we suggest exploring AltIndex.
AltIndex offers stock recommendations, notifications, and insights utilizing alternative data. This involves analyzing social media platforms, app downloads, customer satisfaction ratings, and other pertinent data points related to a company.
It monitors this data longitudinally, compares it with other companies, and then utilizes machine learning algorithms to generate investment insights. Stocks receive a ranking score ranging from 1 to 100, streamlining the analytical process that can often be daunting for stock investors.
With a user base of over 10,000 members, AltIndex is widely utilized and trusted. It delivers over 100,000 unique daily stock insights and alerts, boasting an impressive success rate of 75% with its AI-driven stock picks.
For just $29 per month, investors can subscribe to AltIndex's Starter Plan, receiving stock picks directly to their email inbox along with a variety of other valuable features.
In conclusion, investors seeking growth opportunities should carefully consider fintech stocks. While their share prices may experience volatility, trends indicate a continued embrace of fintech services by consumers. As more individuals become accustomed to fintech solutions and banking, these companies stand to prosper.
Furthermore, if interest rates decrease in 2024 as anticipated, fintech firms, particularly those specializing in "Buy Now, Pay Later" services, are likely to benefit. Fintech enterprises are introducing innovative solutions that disrupt traditional banking services and are expanding into markets historically underserved by conventional banking institutions.
Investing in fintech enables portfolio diversification, especially as it presents a promising long-term growth opportunity. Despite the challenging market conditions faced by fintech companies in the past year, this adversity highlights those companies thriving despite headwinds. As business conditions improve for fintech firms, they will be better positioned to capitalize on opportunities and expand their market share.
