The fintech industry is a booming one that is growing rapidly. As technology continues to lead to evolution in the finance industry, more opportunity arises for the companies that are on the leading edge of this evolution.
While there is a vast number of stocks to choose from in the space, there are a few that are offering what appear to be the largest opportunities.
PayPal is one of the largest companies in the fintech sector, with a market cap of more than $125 billion, and it doesn't look like the company is going to stop growing any time soon. The allure to PayPal is multifold, catering fintech services to millennials, entrepreneurs and those looking for security in online purchases.
As one of the first in the fintech space, PayPal has a brand that is second to none of its peers, giving it the ability to take a large share of a massive market. In fact, the peer-to-peer payments industry is expected to grow to be worth well over $300 billion annually by 2022. Moreover, the digital payments market is expected to grow to be worth $8 trillion by 2020 .
It's also worth mentioning that PayPal is the owner of Venmo, a peer-to-peer payments app that has taken the market by storm. In fact, the company is one of the two top contenders in the peer-to-peer payments battle , competing with the likes of Zelle.
It is argued that the app is doing so well because it is not only backed by the strength and security that PayPal has to offer, it is designed with the millenial in mind. Millenials are the largest audience in the peer-to-peer payments industry, so Venmo's hold on that market is great for PayPal and its investors.
Finally, it's important to keep in mind that while the digital payments market is a massive one, and PayPal is a household name, it actually only takes a small percentage of that market . With the company's leadership role in peer-to-peer payments and expertise in the digital payments sector, there is strong potential for growth ahead.
With PayPal being on the forefront of the peer-to-peer payments and digital payments markets, and a brand that is recognized by the masses, the company is likely to continue to take a large share of these markets. As a result, we can expect to see strong growth from the stock ahead.
Mogo Finance Technology (MOGO)
Mogo Finance Technology is a Canadian fintech play that is one of the most compelling opportunities in the fintech Space, for several reasons.
First and foremost, no matter what metric you look at, the company is highly undervalued compared to its peers. For example, looking at market cap, investors have given the company a value of only $75 per member, of which the company has 800,000. Chime, a challenger in the U.S., recently raised money at a $1.5 billion valuation , and N26 raised funds at a $2.7 billion valuation . This puts their value-per-user at $500 and $1,174, respectively. With similar metrics and a market cap of just under $65 million, highly undervalued doesn't quite explain the situation at Mogo.
Nonetheless, it's not enough to just say that a company is undervalued. There's got to be more of a reason to be interested, and when it comes to Mogo, there is. The company is quickly emerging as a leader in the Canadian fintech space - a space with under a half dozen realistic competitors.
Furthermore, analysts have been bullish on the stock. Most recently, noted technology analyst firm Craig-Hallum initiated coverage with a buy rating and a price target of $7 per share. At that price target, the analyst sees potential growth in multiples ahead. Moreover, the analyst suggested that the price per share could climb to $19 by 2021, with a user base growing to more than 1.5 million!
Finally, Mogo is not new to this industry. In fact, the company started more than 15 years ago. It is also considered to be one of the pioneers of bringing multiple digital financial products into its mobile app, helping consumers manage and control their financial lives. In fact, for years, the company has offered products through its mobile app that is just starting to see competitors, like Square (SQ) and some private fintechs like Robinhood and SoFi.
Considering that Mogo has more than 800,000 members, it is the largest in the fintech market in Canada. Nonetheless, the company is very small compared to the opportunity for future growth, considering that some of the large banks in Canada have more than 10 million customers.
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