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Coinbase Global (XNAS:COIN)
This startup is a major player in the Bitcoin world and has been expanding into other currencies like Ether. Its goal is to be a one-stop-shop for all of your cryptocurrency needs by providing a secure way to buy and sell online. Recently it partnered with Circle, a leading fintech company that allows users to send and receive payments across social networks. This new partnership should improve their current offerings for users, which include easy trading between fiat currencies (USD/EUR/GBP) as well as Bitcoin (BTC). If you’re looking for a company that’s been around for several years, Coinbase has been in operation since 2012. Coinbase is big on transparency for investors, so it’s easy to see its profitability and how soon it may be able to pay dividends.
Not a new player on the fintech stock scene (founded in 2007), Zuora provides cloud-based billing software that helps companies make more money from subscriptions and recurring payments written by customers through an API or software title (such as a mobile app). Zuora has partnerships with over 20 of publishing’s biggest names, including tech giants like Adobe and Oracle. The company has a highly profitable business model and is valued at over $1.9 billion. It is also acquiring new technology. Zuora won the 2020 CODiE Award for Best Subscription Billing Solution.
Mogo is a Canada-based fintech company offering solutions to help customers control their financial health. The company offers personal loans, identity protection, crypto trading, credit scores, prepaid Visa cards and more. The company is led by CEO David Feller, who is a serial entrepreneur and brought Mogo public in 2015. Recently, Mogo has entered an agreement to purchase Fortification Capital, a registered Canadian investment dealer.
PayPal Holdings (XNAS:PYPL)
This online payment system offers all the functionality of a credit card without having to swipe your card or give out your bank account number (which protects you from potential hackers). Whether you’re paying your friends back for tickets they bought for a gift or you’re ordering a pizza, paying with PayPal is a great way to enjoy all the convenience of a credit card without actually using one.
Yes, it can be scary to trust PayPal as your only form of payment, but it’s been around for years and has had no major security breaches yet that we know of. It has over 205 million active users worldwide and offers buyer protection against any items that can’t be delivered — so if you buy something on eBay that ends up being completely fake, PayPal will refund your money. Its financials are always readily available on its website and look very strong overall.
Founded in 2009, Square provides payment acquiring services to merchants, along with related services. The company also launched Cash App, a person-to-person payment network. Square has operations in Canada, Japan, Australia, and the United Kingdom; about 5% of revenue is generated outside the U.S.
If you're looking to invest in the future of money, start with one of these companies. These four stocks are at the forefront of fintech innovation and are poised to offer investors unreal potential returns as these fintech dynamos continue on their current trajectory.
You might wonder what's so great about some upstart Bitcoin-Esque company like Coinbase (NASDAQ: COIN) or what Coinbase (NASDAQ: COIN) does that Square doesn't do well enough already. That’s a fair question — PayPal (NASDAQ: PYPL) is a major player in the financial world and it’s been around for years now. Coinbase is a publicly-traded company with an 11% share of the entire cryptocurrency market. But just because a company is well established doesn't mean it can't disrupt its own marketplace with new technology (just ask Facebook). Here are the best four fintech stocks to invest in.
Overview: Fintech Stocks
Fintech is short for financial technology. Companies that use fintech are considered to be a part of the new online banking and payment system that includes players like PayPal, Venmo, and Square. These companies offer faster and more efficient ways to exchange money electronically than going through traditional banks. They operate as intermediaries between individuals and traditional banks, but the user experience is much simpler than dealing with a bank because you don't have to contend with bank rules and its contracts or fees.
The first fintech company, Dwolla, was founded in 2008 in Des Moines, Iowa, by Ben Milne. Fintech has never looked back.
Best Online Brokers for Fintech Stocks
Take a look at the online stock brokers that Benzinga recommends.
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Features to Look for in Fintech Stocks
If you're looking to invest in fintech stocks, consider three key characteristics. First, you want to see that the company has been around for a while (at least 3 years). Established companies can be ripe for the kind of disruption that raises stock prices while inspiring greater confidence that they aren’t as likely to close up shop as a younger business.
Secondly, look into whether the company offers a product or service that is not already available in its marketplace. For instance, Square (NYSE: SQ) is great if you want to pay for something without using a credit card, but it's not necessarily filling a unique niche by itself — it's just providing an alternative way to make payments. Compare it to the disruptive fintech Betterment, (privately held) who pioneered a new kind of way for regular people to manage and grow their money.
Finally, if you're considering an investment in an unlisted fintech company, make sure to do your due diligence. Look first at the business model to make sure that it has a good chance of being profitable, and see how quickly this company can pay its investors back. Then look at the value of the intellectual property (IP), too. Evaluate the company’s IP holdings and determine how they're going to protect their IP from potential hackers or competitors who want to steal it from them.
Best Bets in FinTech
Fintech is the mover and shaker of the financial world. Find companies with exciting products and excellent financials for the best possible investment choices for your portfolio.