Fears around surging inflation and a potential recession have led to a massive stock market sell-off of late, causing fintech stocks to retreat significantly. However, the industry has immense growth prospects thanks to rapid technological advances and growing demand for digital transactions.
Furthermore, the Federal Reserve raised its benchmark interest rate by half a percentage point. And it has indicated that it could get even more aggressive with its rate increases to fight inflation, which should help Fintech companies expand their profit margins. According to The ExpressWire report, the fintech market is expected to grow at an 8.6% CAGR by 2024.
Therefore, we think it could be wise to add fintech stocks StoneCo Ltd. (STNE), Marqeta, Inc. (MQ), and Bill.com Holdings, Inc. (BILL) to your one’s watchlist. Wall Street analysts expect these names to rally significantly in price in the near term.
StoneCo Ltd. (STNE)
STNE in São Paulo, Brazil, provides financial technology solutions to merchants and integrated partners to conduct electronic commerce across Brazil's in-store, online, and mobile channels. The company serves approximately 652,600 clients, primarily small- and medium-sized businesses, and 260 integrated partners, such as global payment service providers, digital marketplaces, and integrated software vendors.
STNE’s total revenue surged 87% year-over-year to R$1.87 billion ($370 million) for the fourth quarter, ended Dec. 31, 2021. Its total active payment clients grew 128% year-over-year to 1.77 million. In addition, its TPV came in at R$89 billion ($17.58 million), representing a 38.2% year-over-year increase.
Analysts expect STNE’s EPS and revenue to increase 187.5% and 238.4%, respectively, year-over-year to $0.07 and $368.01 million for the quarter ending June 30, 2022. Wall Street analysts expect the stock to hit $15.42 in the near term, which indicates a potential 76.8% upside.
Marqeta, Inc. (MQ)
MQ in Oakland, Calif., operates a cloud-based open application programming interface platform that delivers card issuing and transaction processing services to developers, technical product managers, and visionary entrepreneurs. It offers solutions in various verticals, including commerce disruptors, digital banks, tech giants, and financial institutions.
On April 21, 2022, MQ announced its new RiskControl solution, a comprehensive product suite to help its customers better optimize their card programs and take control of end-to-end risk management. This should lead to increasing demand for its solutions.
MQ’s total revenue surged 54% year-over-year to $166.10 million for the first quarter, ended March 31, 2022. Its gross profit grew 50% year-over-year to $74.73 million. In addition, its TPV came in at $36.63 billion, representing a 53% year-over-year increase.
For its fiscal year 2023, analysts expect MQ’s EPS to increase 6.3% year-over-year. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. The company’s revenue is expected to increase 79.4% year-over-year to $178.91 million for the quarter ending June 30, 2022. Wall Street analysts expect the stock to hit $14.50 in the near term, which indicates a potential 63.8% upside.
Bill.com Holdings, Inc. (BILL)
BILL provides cloud-based software that digitizes and automates back-office financial operations worldwide for small and midsize businesses. The Palo Alto, Calif.-based concern offers artificial intelligence (AI)-enabled financial software platforms. The company also provides software-as-a-service (Saas) and cloud-based payments products, which allow users to automate accounts payable and accounts receivable transactions.
On May 5, 2022, René Lacerte, BILL’s CEO and Founder said, "We are executing against our strategy to drive organic momentum across our solutions while building a unified platform experience incorporating the strengths of Divvy and Invoice2go. We are excited about the opportunities ahead as we build the de facto solution to serve small businesses’ financial operation’s needs."
BILL’s revenue surged 179% year-over-year to $166.90 million for the third quarter, ended March 31, 2022. Its non-GAAP gross profit grew 206.7% year-over-year to $141.10 million. In addition, its transaction fees came in at $113.30 million, representing a 286% year-over-year increase.
For the quarter ending Sept.30, 2022, analysts expect BILL’s EPS to increase 40% year-over-year. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Its revenue is expected to be $623.39 million, representing a 161.6% year-over-year rise. Wall Street analysts expect the stock to hit $240.83 in price in the near term, which indicates a potential 103.2% upside.
STNE shares were trading at $8.36 per share on Monday afternoon, down $0.36 (-4.13%). Year-to-date, STNE has declined -50.42%, versus a -15.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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