Under the Symbol:
Fintech and the Rise of Digital Payments
Tuesday, March 12, 2019 10:25 AM
ORLANDO, FL / ACCESSWIRE / March 12, 2019 / The growth of digital commerce continues to drive considerable changes in the global payments ecosystem.
In recent years, with advancements in fintech and the proliferation of mobile technology, change has accelerated.
Venture capital funding of fintech startups surpassed $32 billion in 2018, according to CB Insights.
Based on analyst estimates, fintech companies currently generate approximately $120 billion annually, representing less than 5% of the global financial sector's revenues.
By 2025, these same analysts forecast the industry will reach more than $265 billion.
Innovation in the evolving digital payments space is happening both behind the scenes (clearing and settlement) and at the point of sale (POS).
This innovation is impacting the payments ecosystem in profound ways and capturing ever greater volumes of payment flows for both banks and non-banks alike.
Fintech players span a broad spectrum and include card networks, merchant acquirers, POS players, digital payment platforms, person-to-person companies, bill payment companies, and money transfer companies.
Based on positive recent developments, here are a few fintech stocks to watch:
Green Dot (GDOT), founded in 1999, provides a wide variety of financial technology services, from accounts to processing and settlement. The company reported fourth quarter total operating revenues of $237.8 million and GAAP net income and EPS of $14.3 million and $0.26, respectively. The double-digit growth results are expected to continue as management reaffirmed forecasts for 2019 at the midpoint of guidance ranges. GDOT expects its full year non-GAAP total operating revenues to be between $1.114 billion and $1.134 billion, representing a 10% year-over-year increase at the mid-point, and adjusted EBITDA is expected to increase 16% year-over-year. Add in the company's growing banking-as-a-service segment, and the long-term outlook appears extremely bullish for this established player.
PayPal (PYPL) reported 2018 GAAP EPS of $1.71, up 16% over the prior year. It grew its account base another 17% last year, reaching 267 million active accounts, with a record 13.8 million added in the fourth quarter alone. Person-to-person transactions, such as the company's popular Venmo brand, were key growth drivers. Venmo processed approximately $19 billion of payments in the fourth quarter and $62 billion in payments for the full year. Another bright spot has been mobile payments which grew 40% year-over-year in the fourth quarter.
Cuentas (OTCQB: CUEN) is a relative newcomer in the payments space. It burst onto the scene last year through a series of key acquisitions and partnerships. While CUEN offers similar services as GDOT and PYPL, this upstart stands to become the dominant player for a sizeable niche: catering to the underbanked and unbanked Latino populations of the U.S., a market currently ignored by established operators. CUEN's comprehensive, cross border service offering and unique network of 30,000 bodegas in key markets in the U.S. give the company a nearly impenetrable competitive advantage. The company reported $62 million in sales in the first nine months of 2018. At a market cap of just over $3 million, the upside potential is tremendous. Learn more at www.cueninfo.com.
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