Which Fintech Stock Scores Wall Street’s “Strong Buy” Rating?

Fintech or financial technology stocks had a stellar run in the earlier days of the pandemic fueled by robust e-commerce spending, rapid transition from cash to digital payments, and the growing demand for innovative digital financial solutions and cryptocurrencies. However, like other growth stocks, fintech stocks have also been battered this year by macro challenges and fears of the economy slipping into a recession. We will discuss the recent performance of three beaten-down fintech stocks, SoFi (NASDAQ:SOFI), Block (NASDAQ:SQ), and Affirm (NASDAQ:AFRM). Using TipRanks’ Stock Comparison tool, we will compare these fintech stocks to pick the one that Wall Street believes is the most attractive.

SoFi Technologies (SOFI) Stock

Financial services company SoFi’s upbeat second-quarter results impressed investors. Revenue increased 57% to $362.5 million, while net loss shrank to $0.12 from $0.48 in the previous quarter. The company ended the quarter with 4.3 million members, reflecting a 69% year-over-year increase.  

SoFi’s banking business is also gaining traction. The company secured a bank charter earlier this year by acquiring Golden Pacific. SoFi Bank generated a net income of $25 million in the second quarter.    

Also, the recent announcement by President Joe Biden about the federal student loan moratorium was a positive development for the company. As per the latest announcement, federal student loans up to $10,000 will be forgiven for borrowers earning under $125,000 per year or households with an income of less than $250,000. The president extended the pause on federal student loans one last time through December 31, 2022.

Several extensions of the student loan moratorium have impacted SoFi as student loans account for a significant portion of the company’s loan portfolio.

What is the Price Target for SoFi?

Mizuho Securities analyst Dan Dolev noted that the president’s extension of the moratorium was “in-line to slightly ahead” of the management’s estimate (they assumed it would extend through January 2023), which he believes is a positive. The analyst feels that the moving up of the repayment timeline by a month might cause a “pull-forward” in refinance demand. Dolev reaffirmed a Buy rating on SoFi stock with a price target of $8.

Overall, consensus among analysts is a Moderate Buy based on five Buys and four Holds. The average SoFi price target of $8 implies 29.2% upside potential.

Block (SQ) Stock

The crypto winter impacted Square’s bitcoin revenue, causing the company’s overall second-quarter revenue to fall 6% to $4.4 billion. Adjusted earnings per share plunged 63% to $0.18. Excluding bitcoin revenue, the Q2 top line increased 34% to $2.62 billion. Gross payment volume (GPV) grew nearly 23% to $52.5 billion.

Looking ahead, Block continues to enhance its two ecosystems – Square (which offers various solutions to merchants) and CashApp (which includes peer-to-peer payments, bitcoin revenue, and other solutions). Moreover, the company’s Afterpay acquisition earlier this year helped it expand into the lucrative buy now, pay later business.

Block continues to extend the reach of its Square ecosystem. With the help of innovative solutions, the company’s gross profit from mid-market sellers grew by 24% in Q2. The Square ecosystem is seeing rapid growth in the food and drink vertical. The GPV from Square for Restaurants sellers more than doubled in the first half of 2022 compared to the same period in the prior year. Block is also capturing growth beyond the U.S. and introduced 44 products in its international markets in the first six months of 2022.

Block is also strengthening its Cash App business by expanding into new demographics and increasing customer engagement through various offerings like Cash App Borrow and RoundUps. While Cash App Borrow is the company’s first credit product, Round Ups allows customers to invest their spare change from their Cash App balance into a stock or bitcoin every time they use their Cash App Card.   

Will Block’s Share Price Go Up?

Andrew Bauch, an analyst at SMBC Nikko Securities America, opines that Block may see weakness from small and mid-size businesses amid a challenging economic backdrop. However, he expects these headwinds to fade.

Bauch added, “We believe that if the past is precedent, periods of economic disruption have become share gaining catalysts for differentiated [internet point of sale] providers such as Block.” Based on his investment thesis, Bauch retained a Buy rating on Block stock but lowered the price target to $120 from $140 to reflect the post-earnings sell-off and a tough macro environment.

On TipRanks, Block earns a Strong Buy consensus rating backed by 26 Buys, five Holds, and one Sell. At $112.69, the average Block stock price prediction suggests 59.6% upside potential.  

Affirm Holdings (AFRM) Stock

Affirm offers a buy now, pay later payment option to consumers. At the end of Fiscal 2022 (June 30, 2022), active consumers on the company’s platform grew 96% to 14 million. Moreover, the number of active merchants jumped to 235,000 from 29,000, thanks to the rapid adoption of Shop Pay Installments by merchants using Shopify’s (SHOP) platform.  

In May, Affirm announced a multi-year extension of its partnership with Shopify, which makes it the exclusive pay-over-time provider for the Shop Pay Installments facility in the U.S. This partnership enables Shopify merchants to offer their consumers the option to spread out purchases up to $3,000 into four interest-free biweekly payments with no fees.

Affirm recently announced mixed results for Q4 Fiscal 2022 and disappointing guidance for Fiscal 2023. Affirm’s fiscal Q4 revenue grew 39% to $364.1 million and exceeded analysts’ expectations. Gross merchandise value (GMV) jumped 77% to $4.4 billion. However, the company delivered a wider-than-anticipated net loss of $0.65 per share.  

What is the Target Price for Affirm?

Following the Q4 print, Bank of America analyst Jason Kupferberg reduced his price target for Affirm stock to $38 from $45 and maintained a Buy rating. Commenting on the company’s Fiscal 2023 guidance, the analyst noted that the company will be lapping the Shopify and Amazon (AMZN) partnerships. However, Kupferberg expects GMV growth at a slower rate than he anticipated.

Kupferberg remains bullish on Affirm as he believes that the company is a “share-taker and long-term beneficiary in the high growth” buy now, pay later space and has an attractive longer-term risk-reward profile.

Affirm scores a Moderate Buy consensus rating with nine Buys, five Holds, and three Sells. The average Affirm target price of $35.13 implies 48.2% upside potential. 


Subdued consumer spending and a potential rise in delinquencies and loan defaults could impact the near-term performance of fintech companies. That said, Wall Street seems to be confident about the long-term prospects. Analysts are currently treading cautiously with regard to SoFi and Affirm stocks.

Compared to SoFi and Affirm stocks, analysts are more optimistic about Block based on the massive growth opportunities for its CashApp and Square ecosystems. Moreover, they estimate a higher upside potential for Block stock than the other two fintech stocks.


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