Our theme of Fintech Stocks – which includes digital payments and lending players, card networks, and insurance technology players – is having a tough 2022, declining by about 25% year-to-date, marginally underperforming the Nasdaq-100 which remains down 21% over the same period. There are a couple of factors weighing down the theme. While fintech companies saw demand rise strongly through the pandemic, driven by rising e-commerce spending, an accelerated shift from cash toward digital payments, and growing interest in cryptocurrencies and digital wallets, some of these trends appear to be cooling off. For instance, e-commerce sales growth has moderated over the most recent quarter, with bellwether Amazon
So what’s the outlook for the theme? The opportunity for fintech companies is certainly large, considering the total size of the banking, lending, trading, investing, and insurance industries. Unlike the traditional financial services industry, which incurs high costs relating to branches, staffing, customer acquisition, and regulatory overhead, fintech players greatly operate virtually, with asset-light models giving companies scope to drive margins as they build scale. That being said, the theme could see pressure in 2022 given the tightening monetary environment and investors reducing exposure to pandemic era winners. Within our theme, Mastercard stock has fared relatively better, declining by about 3% year-to-date. On the other side, Paypal stock has been the worst performer, with its stock down by about 53% year-to-date.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates