Best Fintech Stocks for 2021
Looking for the best fintech stocks of 2021? You’ve come to the right place. Technology continues to change our world at a rapid pace and the financial industry is no exception. Let’s take a look at the ever expanding fintech sector and all that it has in store.
What is Fintech?
“Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services.” Payment apps, peer-to-peer financial transfer services, digital wallets, brokerage platforms and cryptocurrencies are all examples of fintech.
Traditionally, financial technology was used primarily by banks, brokerages and other financial institutions. But as these technologies became accessible to every-day consumers, the fintech space quickly expanded to accommodate the growing demand. Fintech has also helped level the playing field, making investing accessible for the everyday citizen with apps like Robinhood. The expansion of online brokerages into the app space has changed the game forever. What used to cost $50 or more to make a trade is now free.
Blockchain has also been instrumental in decentralizing control of currency. “DeFi” or decentralized finance describes the shift away from centralized finance towards peer-to-peer systems built on the decentralized Ethereum blockchain.
Payment apps such as Paypal, Venmo, Stripe, Google Pay and Apple Pay have been steadily increasing in recent years as well. Paypal currently has 377 Million active users, with many of their competitors not far behind. Anyway you look at it, fintech is here to stay in a major way.
So that leads us to ask…with all of these new technologies (hopefully) improving our lives, how can investors identify the best fintech stocks of 2021? As with any stock, it’s important to consider company earnings, competition, strength of leadership, debt and other key indicators. All things considered, here are some of the top fintech stocks to keep an eye on in the coming years.
Top Fintech Stocks for 2021
5. Charles Schwab (NYSE: SCHW)
If you’re looking for a great stock to hold for the long haul, consider Charles Schwab (NYSE: SCHW). This familiar brokerage joined forces with TD Ameritrade last fall to the tune of a $22 billion merger. In the past year, the stock has ranged from a low of $28 to a high of $62. The company recently laid off 200 employees to “reduce overlapping or redundant roles across the two firms,” according to a statement released by Schwab spokesperson Mayura Hooper. Over the next few years, the company is looking to optimize their workforce and streamline processes to better serve their 30 Million+ brokerage account holders.
4. Paypal (NASDAQ:PYPL)
Another familiar name on our list is Paypal (Nasdaq: PYPL). This comes as no surprise as the payment company continues to reward investors year-over-year. The fintech stock went from $82 to over $300 in the past 52 weeks! And with Paypal’s dominance in the online payment space, this upwards trend could continue for quite some time. Paypal also added the ability to buy and sell cryptocurrencies late last year.
3. Square (NYSE: SQ)
Square (NYSE: SQ) checks all the boxes when it comes to one of the best fintech stocks of 2021. With over 30 million active users, Square’s Cash App platform continues to expand, adding new features such as free trades, mobile deposits and integrations with services like Credit Karma. Unlike Paypal’s recent adoption, Square has been using cryptocurrencies since 2018 and has seen a huge surge of revenue from it.
“Cash App generated $1.63 billion in revenue in bitcoin and $ 32 million in bitcoin gross profit in the third quarter of 2020, up around 11x and 15x year-over-year.”
Their latest purchase of 4,709 bitcoins to the tune of $50 million, further cements their bullish stance on crypto moving forward.
2. Sea Limited(NYSE: SE)
Trends Expert Matthew Carr recently wrote about the Singapore-based internet company.
“Imagine you could combine the e-commerce platforms of Amazon and eBay, with the online gaming platforms of Electronic Arts and Activision Blizzard. Then, take it a step further and add the mobile payment capabilities of PayPal and Square.
Now, purchasing a single share of each of those companies would cost you a combined $4,075. And that’s to own just one share of each. If all of those companies were combined, instead of owning shares of multiple companies, you’d have to purchase only one share.
And all that potential growth would be funneled into a single place. Well, that’s what you get with Sea Limited (NYSE: SE).”
Carr went on to say “Sea is now Southeast Asia’s most valuable company, even though its market cap is less than 10% of Amazon’s and roughly a fifth of Alibaba’s. But for the year ahead, emerging markets should outpace the developed world. And there are few areas that offer more attractive upside than Southeast Asia… and few companies that are more attractive than Sea.” Read the full article here.
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Upcoming Fintech IPOs
In addition to our list of the best fintech stocks of 2021, we are keeping our eye on fintech stocks that have yet to IPO. One such company is SoFi. Investment U IPO Writer, Amber Deter recently examined the personal finance company and what it has in store. Read her article here: SoFi IPO: Stock Coming in 2021 via Palihapitiya’s Newest SPAC
What is the SoFi IPO date? “Although the deal was unanimously approved by both board of directors, the deal is subject to approval by shareholders and other closing conditions. As a result, the date isn’t yet known. However, the SoFi IPO press release claims investors should expect to see SoFi stock in the first quarter of 2021.”
Best Fintech Stocks for 2021 – Summarized
With so many tech-based investment opportunities out there it can be hard to know what direction to lean. We hope this list of the best fintech stocks of 2021 will provide more clarity for you when making your decisions.
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About Ben Broadwater
Ben Broadwater is the Director of Investment U. He has more than 15 years of content creation experience. He has worked and written for numerous companies in the financial publishing space, including Charles Street Research, The Oxford Club and now Investment U. When Ben isn’t busy running Investment U, you can usually find him with a pair of drumsticks or a guitar in his hand.