SoFi Technologies (NASDAQ:SOFI) is a leading online platform that provides a range of financial products and services, such as personal loans, mortgages, student loans, investments, banking and insurance. The company has grown since the Great Recession, which saw many traditional banks retreating from certain financial products, including unsecured personal lending and mortgages. Since then, SoFi has expanded into new markets, including crypto trading, robo-advising and credit cards.
However, SoFi is not the only fintech platform to gain significant market traction. Below are three stocks set to be the next SoFi.
Upstart Holdings (UPST)
Upstart Holdings (NASDAQ:UPST) is a cloud-based artificial intelligence (AI) lending platform that connects consumers with banks and credit unions. The company uses AI to assess the creditworthiness of borrowers based on a plethora of variables, such as education, employment, and income. As of their recent third-quarter results, the company has partnered with over 100 banks and credit unions and has facilitated over $35 billion in loans since its inception.
Unfortunately, a high-interest rate environment has negatively impacted Upstart’s ability to originate loans, compressing revenue growth in recent quarters. UPST shares plummeted around 27% after a disappointing Q3 earnings print, but as interest rates have most likely peaked, now may be a good time to allocate to this up-and-coming fintech stock. Upstart’s AI-driven product could gain more steam as the economy level sets and recovers in the coming months.
Affirm Holdings (AFRM)
Affirm Holdings (NASDAQ:AFRM) is a fintech company that provides point-of-sale financing solutions for consumers and merchants. In particular, Affirm is a leading provider of buy now, pay later (BNPL) services, allowing consumers to split their purchases into interest-free or low-interest installments. While I have made criticisms of BNPL platforms in the past, their traction amongst consumers is noteworthy. Still, the company’s share price has had mixed performance throughout 2023 due to the uncertainty of the high-interest rate environment. The share price had fallen nearly 7% by early May but has since then entered a number of peaks and troughs.
Affirm’s management team hinted higher rates could weigh on the company’s margins in the near future, spooking a number of investors. However, similar to Upstart, the company could see tremendous growth reinvigorated as real interest rates decline. Investors seem to believe this, as they have been pumping more money into the stock recently.
Marqeta (MQ)
Marqeta (NASDAQ:MQ) is a fintech company that provides a modern card issuing platform, enabling businesses to create customized payment cards for their customers or employees. Marqeta’s platform allows users to control every aspect of their card programs, such as spending limits, rewards, fees, fraud prevention, and real-time data. Furthermore, Marqeta supports key digital wallets, including Apple Pay and Google Pay.
The fintech company’s future is looking even brighter these days, especially as the global economy avoids a hard-landing recession scenario. In their third-quarter earnings print, total processing volume increased 33% from a year-over-year perspective, indicating the platform has continued to gain users and increase volume. Marqeta also made significant improvements in profitability with adjusted EBITDA up 84% YoY, edging closer to positive territory. The Block (NYSE:SQ) partnership renewal will only help further Marqeta’s reach in the wider payments market.
While shares are only up nearly 4% YTD, now may be a good buying opportunity for investors interested in the payments processing solutions market, which is estimated to reach $140 billion in size by 2023.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
