Are These Fintech Stocks Poised To Benefit From The Surge In Bitcoin?
Fintech stocks are hot in the stock market today. With the world getting pushed further into the digital realm by the coronavirus pandemic, investors today are also looking for top fintech stocks to buy that can tap on bitcoin’s rising price. The cryptocurrency just hit $19,000, a level it hasn’t seen in three years. You could say it is bringing flashbacks of its monstrous rally back in 2017. While owning bitcoin could be a more straightforward bet, conservative investors typically avoid getting their hands on it because of its extreme volatility. That said, could investing in companies who have a component of their business model in bitcoin be a better option to opt for?
Many market participants, crypto enthusiasts or otherwise, have described bitcoin as having characteristics of a safe haven like gold stocks. Investors often flock to these investments in times of social and economic turbulence. With global central banks continuing to print money indefinitely, investors are turning to commodities with a finite supply. And bitcoin arguably fits into that description.
While it’s great for existing investors to see their commodities rise in prices, there’s really not much ‘utility’ in owning these. That’s because most investors have no intention of using bitcoin or physical gold to make purchases. For this reason, instead of buying bitcoin, could these fintech stocks be a better investment?
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Top Fintech Stocks To Buy [Or Sell] Now: MicroStrategy
MicroStrategy (MSTR Stock Report) is a provider of business intelligence software that enables companies to report, analyze and monitor the data stored across their enterprise to reveal the trends and insights needed to make better business decisions. Shares of MicroStrategy surged 12% on Tuesday’s intraday trading. This came after a bullish report from short-seller Citron Research. While Citron appeared to be skeptical in the past, things have changed.
So, what actually happened? The company received rare buy recommendations from Citron’s Andrew Left, who said that “there is no better way to play bitcoin in the stock market today”. According to his research, MicroStrategy owns more bitcoin than any publicly traded company in the U.S. That makes MSTR stock a convenient instrument to bet on the cryptocurrency.
During the third quarter of the year, MicroStrategy bought 38,250 bitcoin tokens for a total of $425 million. That investment has now grown into nearly $735 million at current prices. Left estimates that MicroStrategy’s shares would be worth $700 apiece if the price of bitcoin rises to $50,000 per token. Of course, bitcoin needs to rise by over 150% to get there. And there is no guarantee when that will happen, if at all. Nevertheless, you got to acknowledge that MicroStrategy has made a strong statement by moving most of its cash into bitcoin. Does that make MSTR stock a good investment right now? Only time will tell.
Top Fintech Stocks To Buy [Or Sell] Now: Square
Square’s (SQ Stock Report) was a pioneer in offering its users the ability to purchase cryptocurrencies through its Cash App in 2017. The company purchased more than 4,700 bitcoins for an average price of roughly $10,600 in early October. With bitcoin trading more than $19,000 today, that $50 million investment is now worth around $90 million. That’s an 80% gain in a little more than a month. You could say that the recent increase in SQ stock has to do with the virtual asset. The company has also received positive commentary from Mizuho Securities on Monday, raising his price target to $300 per share. That implies approximately 50% potential upside from its existing stock price of $202.77.
Also, the company brought in $306 million in revenue from selling bitcoin in the Cash App. Square was not shy about its belief in the future of the cryptocurrency. The company said that “it believes that cryptocurrency is an instrument of economic empowerment and provides a way for the world to participate in a global monetary system.”
No doubt, the coronavirus crisis has accelerated contactless payments. And in the case of Square, its Cash App has fueled considerable growth. What’s more, the company recently launched a kitchen display system software that seamlessly displays and organizes order tickets from multiple channels. Considering that Cash App’s monthly active users have been growing aggressively and the bullish momentum from bitcoin, would you buy SQ stock today after another strong quarter?
Top Fintech Stocks To Buy [Or Sell] Now: PayPal
Another fintech stock with bitcoin exposure is PayPal (PYPL Stock Report). According to Pantera Capital, PayPal clients have been buying the majority of the new bitcoin supply, comprising 70% of the new bitcoin supply within three weeks. No doubt, PayPal is at the forefront of digital finance. Its services range from mobile commerce to peer-to-peer transfers. And now, offering cryptocurrencies on its platform could lead to asymmetric returns. If crypto becomes fully established and regulated, PayPal could stand to benefit hugely. All these areas that the company is looking at 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.
Of course, the company also saw a boost of demand in electronic payments as consumers have been avoiding physical cash. That’s to curb the spread of the novel coronavirus. And this trend contributed significantly to 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, which has recently filed for an IPO.
The thing is, PayPal has been attracting investors’ attention for some time now. Last week, PayPal also announced the launch of a new fundraising service. PayPal calls it the “Generosity Network”, which will take on the likes of GoFundMe. This is part of the company’s increasing reach across more parts of financial services. With this new service, one can set up a fundraising page to enable donations within PayPal’s platform. As the top dog among fintech companies, is PYPL stock the best fintech stock for bitcoin exposure?