Could These Fintech Stocks Soar With Ant Group’s IPO?
Looking to invest in Ant Group’s IPO? Unfortunately, it is not coming to the U.S. stock market. And that’s perfectly understandable considering the increasing tensions between both the United States and China. But not all hope is lost, investors who don’t have access to stocks across the Pacific could invest in Alibaba (BABA Stock Report). Alibaba is currently the biggest shareholder of Ant Group, with a 33% ownership. The Alibaba digital finance spin-off, which offers people in China a one-stop-shop for loans, investments, and more, will list shares in Hong Kong and Shanghai Stock Exchanges. The Chinese fintech company is set to raise around $34 billion. That would make it the world’s largest IPO thus far in history.
Ant’s revenue rose 38% year-over-year to $10.7 billion in the first half of 2020. Within that total, its digital finance services revenue rose 56% to $6.8 billion. Its net profit grew 21% year-over-year to $3.2 billion. With such a record, it’s understandable why every investor wants a piece of the company. American investors who are keen on buying Ant group stocks could sign up with brokers such as Interactive Brokers or Fidelity, which allow U.S. investors to buy shares in Hong Kong.
Alternatively, investors could also buy an ETF that focuses on recent IPOs and Asian markets that are likely to add shares of Ant to their portfolio. According to CNBC, CFRA analyst Todd Rosenbluth recently predicted Renaissance Capital’s International IPO ETF (IPOS Stock Report), which allocates over half its portfolio to Chinese stocks, would be one of the first ETFs to buy shares of Ant.
3 Fintech Stocks To Buy [Or Avoid] For The Future Of Finance
Financial technology services, or fintech, have been a growing sector. This comes as many financial services related companies incorporate technology into their innovation. For instance, we saw how companies like Amazon (AMZN Stock Report) and Shopify (SHOP Stock Report) benefited tremendously from online spending during the pandemic. And these e-commerce companies require a good working relationship with financial intermediaries. As a result, fintech stocks are well-positioned to benefit immensely. After all, e-commerce’s success is fintech’s success. Given the sharp increase in the use of fintech amid the global health crisis, are these the top fintech stocks to buy to ride on the secular growth trend?
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Top Fintech Stocks To Buy [Or Avoid]: PayPal
PayPal (PYPL Stock Report) operates a worldwide online payment system that supports online money transfers. It also serves as an electronic alternative to traditional paper methods like checks and money orders. The company saw its stock price surge 80% year-to-date. The recent surge could simply be because the company unveiled a new service that will allow users to trade cryptocurrencies. With bitcoin prices surging to 52-weeks high in recent weeks, the platform could be seeing increased demand in trading activities. Separately, the company expects to report its third-quarter earnings on November 2.
Customers have been shifting from cash to digital payments, which contributed to the boost in PayPal’s business. On top of that, the company has reached record growth for new accounts this year. By introducing new services and products such as QR codes for payments, PayPal is diversifying its revenue sources. It also recently launched an installment payment program called Pay in 4, which allows customers to pay in installments, interest-free. That brings PayPal head to head with “buy now, pay later” companies like Affirm and Afterpay which have gained a lot of attention in recent years.
With about 346 million active users, PayPal is not resting on its laurels. Earlier this year, CEO Dan Schulman said that he would like to see 1 billion people on the platform. PayPal is at the forefront of digital finance. Its services range from mobile commerce to peer-to-peer transfers and other digital services. These are large markets worth over $100 trillion in total market size. PayPal’s ability to benefit from the pandemic tailwinds does not diminish its future prospects. As the top dog among fintech stocks, is PYPL stock a long term growth driver to bet on?
Top Fintech Stocks To Buy [Or Avoid]: Square
Next up on the list, Square (SQ Stock Report) has been one of the best stocks to buy during the worst economic periods in decades. There are a few reasons to be optimistic about Square. Its innovative products and its status at the forefront of the accelerating cashless trend have helped, as has its strategic position serving buyers and sellers alike. The company has enabled its clients to buy bitcoin on its Cash App since 2018. In fact, it has been seeing a huge demand in the third quarter in comparison with the quarter before. Earlier this month, the company announced that it has bought $50 million dollars worth of bitcoin. That represents about 1% of the company’s total assets. And with bitcoin price surging to 52 weeks high recently, could it help nudge up SQ stock? The company is slated to report its third-quarter earnings on November 5.
“Square believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose,” the company said in a release.
Most consumers are probably familiar with Square for the company’s seller ecosystem. For years, Square has been aggressively expanding its offerings with small businesses by providing payment processing devices and solutions. Over a span of seven years since 2012, gross payment volume (GPV) crossing Square’s network skyrocketed from $6.5 billion to $106.2 billion.
No doubt, the coronavirus crisis has accelerated contactless payments. And in the case of Square, its Cash App has fueled considerable growth. Cash App’s monthly active users rose from 7 million more than 2 years ago to over 30 million now. Of course, high growth stocks like these don’t come cheap. With recent market choppiness and fear of another tech bubble bursting, the stock could see some volatility. Could there be an opportunity to buy SQ stock on the dip in the coming week or two?
Top Fintech Stocks To Buy [Or Avoid]: MercadoLibre
The coronavirus pandemic has been a boon for MercadoLibre (MELI Stock Report). No doubt, MercadoLibre is the undisputed leader of e-commerce in the Latin American market. But there is also a high growth opportunity in other segments of the company. If you have heard of this company, chances are you know it has a payment system by the name of Mercado Pago. Recognizing the lower access to traditional banks in Latin America, customers can deposit funds into their Mercado Pago account through a wide network of convenience stores and other locations. The money can then be utilized for online purchases, bills payments, and transfers. And this payment system has brought impressive results to the company.
MercadoLibre’s net revenue rose 123% in the second quarter in local currency terms. That is a sharp rise from the 71% growth the company witnessed during the first quarter. E-commerce and digital payments were already rising before the virus struck, but got a further boost at the height of the pandemic. The company saw gross merchandise volume increased by 102%. That’s an increase from 34% previously. Similarly, payments on MercadoPago recorded tremendous gains. The total payment volume jumped by 142%. By comparison, first-quarter growth was “only” 82%.
With its leading position in both e-commerce and digital payments in its geographies, MercadoLibre certainly has a lot of potential going for it. Coupled with the rising affluence in the countries that the company operates, is MELI stock a buy and hold for the decades to come?