12 Best Fintech Stocks to Buy After The Selloff

Published on October 7, 2022 at 10:27 am by Usman Kabir in Hedge Funds, News

In this article, we discuss 12 best fintech stocks to buy after the selloff. If you want to read about some more fintech stocks, go directly to 5 Best Fintech Stocks to Buy After the Selloff.

The fintech industry has taken a beating in the past few months due to soaring inflation and rising interest rates, a combination that has pushed investors towards value offerings at the stock market. However, the slowdown has also created incredible buying opportunities in the fintech sector that looks set to rise given the advancements being made in the fields of artificial intelligence, robotic process automation, smart contracts, DeFi, and virtual reality. Fintech is no doubt the biggest disruptor in the finance industry.

This disruptive force has already won the hearts of tech giants like NVIDIA Corporation (NASDAQ:NVDA), Mastercard Incorporated (NYSE:MA), and Alphabet Inc. (NASDAQ:GOOG), all of whom have pledged hundreds of millions into the development of fintech products over the next few years. As the fintech market evolves from a disruptive one to an established one, as indicated from the more than 26,000 fintech firms in existence, it looks ready to capture a huge chunk of the $4 trillion global e-commerce market by 2027.

Some of the key trends shaping the fintech industry include the introduction of new features, the expansion of machine learning algorithms to beat fraudulent practices, and the gradual phase out of cash and physical cards that are being replaced with virtual cards secured with robust biometric technology. According to Fintech Magazine, about 30% of all banking customers use at least one financial service offered by a non-traditional provider, and this number looks set for explosive growth in the coming years.

Our Methodology

The companies that operate in the fintech sector were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. Data from around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Photo by Clay Banks on Unsplash

Best Fintech Stocks to Buy After The Selloff

12. Futu Holdings Limited (NASDAQ:FUTU)

Number of Hedge Fund Holders: 9

Futu Holdings Limited (NASDAQ:FUTU) operates an online brokerage and wealth management platform in Hong Kong and internationally. It is one of the best fintech stocks to invest in. The stock has gained in the past few weeks after reports suggested that the US and China had reached a tentative auditing deal that would allow independent access to the accounting books of Chinese firms, in line with new US regulations in this regard.

On August 31, JPMorgan analyst Katherine Lei upgraded Futu Holdings Limited (NASDAQ:FUTU) to Overweight from Neutral with a price target of $62, up from $55, noting that the Q2 results of the company beat expectations on the back of stable client growth.

At the end of the second quarter of 2022, 9 hedge funds in the database of Insider Monkey held stakes worth $153 million in Futu Holdings Limited (NASDAQ:FUTU), compared to 11 in the preceding quarter worth $124 million.

Just like NVIDIA Corporation (NASDAQ:NVDA), Mastercard Incorporated (NYSE:MA), and Alphabet Inc. (NASDAQ:GOOG), Futu Holdings Limited (NASDAQ:FUTU) is one of the best fintech stocks to buy now according to hedge funds.

11. Upstart Holdings, Inc. (NASDAQ:UPST)

Number of Hedge Fund Holders: 15

Upstart Holdings, inc. (NASDAQ:UPST) operates a cloud-based artificial intelligence (AI) lending platform in the United States. It is one of the top fintech stocks to invest in. The company recently announced that it had allowed Vantage West Credit Union to offer personal loans to new and existing members across Arizona. Vantage West is a credit union with over 170,000 members and assets amounting to more than $2.6 billion.

On July 17, Piper Sandler analyst Arvind Ramnani maintained a Neutral rating on Upstart Holdings, Inc. (NASDAQ:UPST) stock and lowered the price target to $25 from $44, highlighting that over the next 6 to 18 months, enterprise technology spending could be pressured as macro headwinds persist.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Upstart Holdings, inc. (NASDAQ:UPST), with 2.7 million shares worth more than $84 million.

In its Q2 2022 investor letter, Vulcan Valve Partners, an asset management firm, highlighted a few stocks and Upstart Holdings, inc. (NASDAQ:UPST) was one of them. Here is what the fund said:

“Upstart Holdings, inc. (NASDAQ:UPST) was a material detractor for the quarter. It was a mistake, and we sold our position. Upstart is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models that are designed to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. When we purchased Upstart, we believed the company had an excellent product and the addressable market was large.

Upstart’s results during 2021 were impressive. In the first quarter of 2022, the company reported solid results but lowered guidance and, more importantly, used its balance sheet to warehouse loans temporarily. The company’s decision to use its balance sheet to finance its growth surprised us and other market participants, and its stock price decreased dramatically. While we admire the management team, we are less confident in the company’s long-term prospects.

It will be more difficult than we anticipated for Upstart to extend its competitive advantages with smaller banks into adjacent markets such as auto loans and mortgages. As a result, our value for Upstart is unstable and the company no longer qualifies for investment. We are following our discipline and reallocating capital into companies with more stable values.”

10. SoFi Technologies, Inc. (NASDAQ:SOFI)

Number of Hedge Fund Holders: 22

SoFi Technologies, Inc. (NASDAQ:SOFI) provides digital financial services. It is one of the premier fintech stocks to invest in. The company recently announced that it had signed Justin Herbert, a quarterback for the Los Angeles Chargers, on a three year partnership. Under the terms of the deal, Herbert will take part in a new brand campaign and television ad.

On September 14, Bank of America analyst Mihir Bhatia upgraded SoFi Technologies, Inc. (NASDAQ:SOFI) to Buy from Neutral with a price target of $9, up from $8, backing the firm to drive user growth and engagement in the coming months.

At the end of the second quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $337.6 million in SoFi Technologies, Inc. (NASDAQ:SOFI), compared to 22 in the preceding quarter worth $475 million.

In its Q4 2021 investor letter, Altron Capital Management, an asset management firm, highlighted a few stocks and SoFi Technologies, Inc. (NASDAQ:SOFI) was one of them. Here is what the fund said:

“We have been building our position in SoFi Technologies, Inc. (NASDAQ:SOFI) over the last two quarters but have not yet written about our thesis until now. SoFi is an online financial technology company that started off refinancing student loans. This segment remains a big part of the company’s business, but they have more recently expanded their products to offer an entire suite of financial services including personal banking, investing, and credit. While their collection of products is still evolving and not yet complete, we believe the company is in the early stages of its inflection. The company nearly doubled its member count over the past year and is growing 50%+ despite its loan refinancing business taking a hit due to the COVID-related loan moratorium. Furthermore, the company is close to obtaining a bank charter through its acquisition of Golden Pacific Bancorp, a community bank based in Sacramento. A bank charter would allow SoFi to take in its own customer deposits, lowering its cost of capital and expanding the company’s breadth of financial offerings (…read more)

9. Affirm Holdings, Inc. (NASDAQ:AFRM)

Number of Hedge Fund Holders: 27

Affirm Holdings, Inc. (NASDAQ:AFRM) operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. It is one of the elite fintech stocks to invest in. The company recently announced that it would extend the services it offers on Amazon with the introduction of pay-over-time option to customers in Canada. This addition will enable shoppers to pay in installments.

On September 7, investment advisory Morgan Stanley maintained an Overweight rating on Affirm Holdings, Inc. (NASDAQ:AFRM) stock and lowered the price target to $53 from $80. Analyst James Faucette issued the ratings update.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Affirm Holdings, Inc. (NASDAQ:AFRM), with 4.1 million shares worth more than $74 billion.

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Affirm Holdings, Inc. (NASDAQ:AFRM) was one of them. Here is what the fund said:

“We recently covered our short position in Affirm Holdings, Inc. (NASDAQ:AFRM) after a rapid decline brought the share price to ~$30 – down from our entry point above $100 – in only 7 months. We discussed Affirm in our Q4 letter, saying the following:

Affirm is a “Buy Now, Pay Later” (BNPL) company founded by former PayPal CTO and cofounder Max Levchin. They provide installment loans to consumers, partnering with retail companies looking to drive higher sales. They have two primary products: a zero-fee installment loan for consumers with the best credit scores, and a more traditional product with 20%+ interest rates for subprime borrowers. Their stated plan is to disrupt the credit industry with more transparent, lower-fee loans. At a roughly $28b market cap at the start of 2022, AFRM stock was priced at more than 20x trailing sales, a steep price for a money-losing lender. While their early lead in online BNPL transactions and partnerships with fast-growing retailers like Peloton has fueled significant historical growth, a wave of competition has arrived… While the stock has already fallen sharply from where we initiated our short position, we think it could fall another ~40% to trade at 8x FY2022 sales.”

8. Coinbase Global, Inc. (NASDAQ:COIN)

Number of Hedge Fund Holders: 29

Coinbase Global, Inc. (NASDAQ:COIN) provides financial infrastructure and technology for the crypto economy. It is one of the most prominent fintech stocks to invest in. On September 29, the company announced that it had teamed up with investment management software provider SS&C to expand the digital asset trading capabilities of the latter. Through the partnership, SS&C clients will gain access to the institutional crypto trading platform, Coinbase Prime.

On September 14, investment advisory JPMorgan maintained a Neutral rating on Coinbase Global, Inc. (NASDAQ:COIN) stock and raised the price target to $78 from $64. Analyst Kenneth Worthington issued the ratings update.

At the end of the second quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Coinbase Global, Inc. (NASDAQ:COIN), compared to 46 in the preceding quarter worth $2.3 billion.

In its Q2 2022 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Coinbase Global, Inc. (NASDAQ:COIN) was one of them. Here is what the fund said:

“Coinbase Global Inc. Ordinary Shares (NASDAQ:COIN) fell during the quarter as the crypto markets continued to suffer. While the company reported disappointing results, it committed to capping EBITDA losses at $500M even in the event of “a prolonged market downturn”. COIN’s ample liquidity ($6b in cash on hand) should enable them to survive a prolonged “crypto winter” and invest to strengthen the business in the downturn. While the crypto market is early in its adoption, Coinbase is focused on building the platform for crypto not only supporting trading, and cold storage, but moving into NFTs, staking, and crypto derivatives. We see tremendous upside potential for COIN over the next decade if they are able to successfully execute on their platform strategy.”

7. Opendoor Technologies Inc. (NASDAQ:OPEN)

Number of Hedge Fund Holders: 39

Opendoor Technologies Inc. (NASDAQ:OPEN) operates a digital platform for residential real estate in the United States. The company recently announced that it would expand the Opendoor Finance App to three more states in the US. The Opendoor Finance App, available only in California, will now launch in Georgia, Arizona, and Texas, promising consumers pre-approval letters in 60 seconds or less.

On September 23, investment advisory Credit Suisse maintained an Outperform rating on Opendoor Technologies Inc. (NASDAQ:OPEN) stock and a price target of $16. Analyst Stephen Ju issued the ratings update.

Among the hedge funds being tracked by Insider Monkey, Hong Kong-based firm Sylebra Capital Management is a leading shareholder in Opendoor Technologies Inc. (NASDAQ:OPEN), with 30.5 million shares worth more than $143.8 million.

In its Q4 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Opendoor Technologies Inc. (NASDAQ:OPEN) was one of them. Here is what the fund said:

“The Fund invests in secular growth and innovative businesses across all market capitalizations, with the bulk of the portfolio landing in the large-cap zone. The Fund is categorized as US Large Growth by Morningstar. As of the end of the fourth quarter, the largest market cap holding in the Fund was $2.5 trillion and the smallest was $791 million. The median market cap of the Fund was $27.5 billion.
The Fund had $1.7 billion of assets under management. The Fund had investments in 63 securities. The Fund’s top 10 positions accounted for 45.4% of net assets. Fund inflows were positive for 2021.We sold Opendoor Technologies Inc. (NASDAQ:OPEN) because we identified issues relating to our long-term theses in the company, and we decided to exit the positions to fund other purchases.”

6. Fiserv, Inc. (NASDAQ:FISV)

Number of Hedge Fund Holders: 59

Fiserv, Inc. (NASDAQ:FISV) provides payment and financial services technology worldwide. The firm recently revealed that merger-related synergy work had caused expenses to increase in the first half of the year. The statement was made by Frank Bisignano, the CEO of the firm, who also said that the company should reap benefits in the remainder of the year as those costs wind down.

On August 11, Evercore ISI analyst David Togut upgraded Fiserv, Inc. (NASDAQ:FISV) to Outperform from In Line with a price target of $149, up from $101, noting that the company was embracing a new growth playbook.

Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in Fiserv, Inc. (NASDAQ:FISV), with 23 million shares worth more than $2 billion.

In addition to NVIDIA Corporation (NASDAQ:NVDA), Mastercard Incorporated (NYSE:MA), and Alphabet Inc. (NASDAQ:GOOG), Fiserv, Inc. (NASDAQ:FISV) is one of the best fintech stocks to buy now according to hedge funds.

In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Fiserv, Inc. (NASDAQ:FISV) was one of them. Here is what the fund said:

“While the threat of disruption risk to these established payment companies should not be taken lightly, it is important to note that many of these emerging disruptors are small relative to the massive global payments network and heavily reliant on the very payment infrastructure they are trying to disrupt. This led us to initiate a position in Fiserv, Inc. (NASDAQ:FISV), whose stock dropped to a level that embedded projections for negative long-term growth despite no current evidence of disruption. We think Fiserv will continue to grow despite perceived disruption risks given its scale and efficiency. Fiserv also owns cloud-based payments hardware and software system Clover, which is both bigger and faster growing than Square; this provides an additional degree of protection against further disruption risk.”

Click to continue reading and see 5 Best Fintech Stocks to Buy After The Selloff.

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