Financial technology (fintech) is a rapidly growing segment of the broader financial sector, and the revenue generated by companies in this area could be enormous. BCG estimates put the global fintech market at $1.5 trillion in sales by 2030.
This is of course just an estimate, but it’s a good indicator of why companies are competing to be at the forefront of new technologies. financial technology services. Two such companies that are already well-positioned to benefit from fintech growth are Sofi Technologies (NASDAQ:SOFI) And Paypal (NASDAQ:PYPL). Here’s why.
SoFi has grown rapidly over the years, adding new financial services and offerings that now include loans, investments, checking and savings accounts, loan refinancing, credit cards and even estate planning.
To put SoFi’s growth in perspective, consider that the company had more than 1 million members at the start of 2020. In December, it announced that it now had more than 10 million members – a 9-fold increase in membership in just five years.
SoFi’s strong membership base has translated into impressive financial results. The company increased its sales by 30% in the third quarter of 2024, to $697 million, and its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 90% to $186.2 million.
SoFi stock has seen a massive rise over the past six months, rising 137% as of this writing. The gains have driven up the premium of SoFi’s stock, which now has a forward price-to-earnings (P/E) ratio of 74. That’s expensive by any standard, but starting a small position could make sense for investors long-term investors who want to own a share of a fintech leader.
Some investors may overlook PayPal when looking for fast-growing fintech companies, but this major fintech player likely still has growth ahead. The company’s person-to-person payments app, Venmo, is a great example of how PayPal is poised to pivot into new areas of growth. Venmo is one of the leading payment apps, with around 88 million users, up from 52 million in 2020.
PayPal’s revenue rose 6% in the third quarter of 2024 to $7.8 billion, and its non-GAAP earnings climbed 22% to $1.20 per share. It also ended the quarter with $1.4 billion in free cash flow and $16.2 billion in cash and cash equivalents.
The company’s 432 million global users are a testament to PayPal’s leadership position in fintech. Its 9% increase in total payments volume in the third quarter, to $422.6 billion, proves that the company knows how to entice its users to continue using its payment platforms.
