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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 ((PYPL - Free Report) ),Affirm ((AFRM - Free Report) ), and Upstart ((UPST - Free Report) ) have each outperformed the S&P 500 Index ETF ((SPY - Free Report) ) dramatically, gaining 15.5%, 26.4%, and 83.5% (compared to the SPY’s 6.7%).
Image Source: Zacks Investment Research
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.
Image Source: Zacks Investment Research
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.
Image Source: TradingView
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 ((COST - Free Report) ) and home improvement stores like Home Depot ((HD - Free Report) ).
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 Visa ((V - Free Report) ) and Mastercard ((MA - Free Report) ).
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.
Image Source: Zacks Investment Research
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.
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3 Fintech Stocks to Buy: AFRM, 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 ((PYPL - Free Report) ), Affirm ((AFRM - Free Report) ), and Upstart ((UPST - Free Report) ) have each outperformed the S&P 500 Index ETF ((SPY - Free Report) ) dramatically, gaining 15.5%, 26.4%, and 83.5% (compared to the SPY’s 6.7%).
Image Source: Zacks Investment Research
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.
Image Source: Zacks Investment Research
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.
Image Source: TradingView
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 ((COST - Free Report) ) and home improvement stores like Home Depot ((HD - Free Report) ).
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.
Image Source: Zacks Investment Research
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 Visa ((V - Free Report) ) and Mastercard ((MA - Free Report) ).
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.
Image Source: Zacks Investment Research
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.