There are numerous financial technology, or fintech companies to monitor and invest in. Problematically, many fintech stocks were hammered in the first half of 2022 as the Covid pandemic slowed economic growth. Moreover, market dynamics like sector rotations and rising interest rates have exerted pressure on payment stocks. Fears of a U.S. economic downturn are growing, prompting inquiries into which payment stocks are best positioned to withstand a downturn.
In addition, competition has increased as well-funded startup companies such as Stripe compete with industry leaders. Furthermore, tech titans like Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN) are encroaching on fintech companies.
Digital technology, cryptocurrencies, and financial software are revolutionizing e-commerce, payment networks, online lending, personal finance, and banking, among other industries. In addition to buy-now, pay-later consumer financing, fintech companies innovate in a variety of other ways.
Payment Stocks
Fintech companies including financial software and finance-investment management, belong to a few IBD groups. Among the 197 tracked industry groups, the largest IBD group of fintech stocks ranks 114th. In the meantime, the pressure on crypto assets continues. Visa (V) and Mastercard (MA) are currently among the stocks with the highest Composite Strength Ratings in the fintech sector. Visa stock earnings for the fiscal third quarter are due on July 26. Mastercard issues earnings reports on July 28. Their recommendations could affect other payment stocks.
Jason Kupferberg, an analyst from the Bank of America said, based on Visa’s mid-quarter update on June 1, they believe V/MA’s underlying business performance was generally tracking modestly ahead of expectations, but likely faced incremental currency headwinds from the U.S. dollar strengthening, and while they expect V stock and MA to reiterate confidence in their constant-currency growth guidance for 2022, they anticipate both will build additional FX headwind into the outlook.
Five IBD stock ratings are combined to create the IBD Composite Rating: the EPS Rating for earnings per share, the Relative Strength Rating, the Accumulation/Distribution Rating, the SMR Rating for sales, profit margins, and return on equity, and the Industry Group Rating.
Fintech Stocks Report Earnings
The decline in the value of publicly traded fintech companies has had an effect on the venture capital industry. The most recent funding round for consumer financing company Klarna resulted in a valuation of $6.5 billion, a decrease of 85% from its previous valuation of $45.6 billion. On May 18, Square-parent Block (SQ) hosted an investor day that was highly anticipated. The administration promoted a strategy based on an ecosystem of ecosystems.
On the heels of Affirm Holdings’ (AFRM) fiscal third-quarter earnings report, AFRM stock, one of the worst-performing technology stocks of 2022, soared. On the release of its first-quarter earnings, Marqeta (MQ) shares increased in value. In addition, Sofi Technologies (SOFI) rose after the company announced earnings in advance. Nu Holdings (NU), a digital bank based in Brazil, saw its stock price rise following a revenue beat during the first quarter. However, Global Payments (GPNfirst-quarter )’s results declined.
In response to slowing e-commerce growth, PayPal Holdings (NASDAQ:PYPL) lowered its 2022 guidance, a move that was viewed by some analysts as a “clearing event.” In the meantime, competition is intensifying on multiple fronts. The fintech industry raised $121.6 billion from venture capitalists in 2021, a 153%ap increase from the previous year, according to a PitchBook report. Stripe, which is well-funded, competes with many industry leaders.
Payment Stocks: PayPal (NASDAQ:PYPL) Falls Off the IBD Leaderboard
Analysts on Wall Street were taken aback by the management’s revelation of a shift in PYPL stock’s strategy during its December-quarter earnings call. The stock of PayPal fell off the IBD Leaderboard. The Leaderboard is IBD’s curated list of top-performing stocks based on technical and fundamental metrics.
In addition to Global Payments, Fiserv (FISV), and Fidelity National Information Services, this year’s underperforming payment stocks include Global Payments, Fiserv (FISV), and Fidelity National Information Services (FIS). The largest merchant acquirers include Global Payments, Fidelity National, and Fiserv. Stocks: PayPal (NASDAQ:PYPL) Falls From IBD Rankings.
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