With clearing skies over Wall Street, Q3 2024 could be a watershed moment for fintech stocks
The third quarter of 2024 is set to uncover plenty of investment opportunities throughout the fintech landscape. Driven by expectations of a return to optimism throughout Wall Street, financial technology will become a key growth sector over the months ahead.
With the likelihood of Federal Reserve rate cuts occurring in the United States during Q3 2024 soaring, there may never be a better time for investors to add fintech stocks to their portfolios.
Crucially, the prospect of rate cuts will encourage higher investment volumes throughout Wall Street and increase consumer spending power and confidence to the point where fintech platforms can see greater usage levels.
With the quarter leading up to the holiday season, we’re likely to see more consumers embrace investment apps, leverage more payments and take a strong interest in using financial services for borrowing and various other purposes.
While the generative AI boom has captured the imagination of retail investors in recent months, the third quarter may belong to fintech. These three stocks could offer significant growth potential for investors.
Global Payments Inc. (GPN)
Source: ST.art/Shutterstock
Brightening consumer confidence in the wake of Fed rate cuts is likely to see a resurgence in Global Payments Inc. (NYSE:GPN) at a time when the payment technology provider’s stock has been steadily sinking.
GPN closed the first half of 2024 down 23.96%, more than 55% below its all-time high market value recorded in 2021.
Despite this, Global Payments Inc. remains a leading payment technology and software solution that’s primed for growth amid rising demand for point-of-sale solutions among retailers and hospitality firms.
Although we recently saw analysts at Seaport Res Ptn lower their Q2 2024 estimates for GPN slightly to earnings per share of $2.72 for the quarter, as opposed to $2.73, it’s worth noting that Global Payments has beaten earnings estimates for the past four consecutive quarters.
With higher payment volume expected for Q3 2024 and beyond, we can expect upcoming outperformance from Global Payments. Following its recent struggles, the stock could represent a great discount for long positions.
PayPal (PYPL)
Source: Tada Images / Shutterstock.com
Following the appointment of CEO Alex Chriss in September 2023, PayPal (NASDAQ:PYPL) has struggled to generate any meaningful momentum to recover its stock value after ending Q2 2024 more than 80% below its all-time high market value.
However, PayPal’s fortunes may be about to change. The recent news that Apple (NASDAQ:AAPL) will be forced to share some of its payment technology following a settlement with the European Union’s antitrust regulators prompted an uptick in PYPL on Wall Street.
Apple’s commitment to opening up its near-field communication technology presents a key opportunity for PayPal in terms of offering substantial levels of competition to Apple. As a result of the settlement, Mizuho Securities analysts placed an ‘outperform’ rating on PayPal with a lofty price target of $90.
While Seaport Res Ptn analysts lowered their expectations for Global Payments, PayPal was handed a small boost to $0.97 per share from initial forecasts of $0.96 per share.
Another source of optimism for PayPal can be found in the performance of the fintech firm’s stablecoin, Paypal USD (PYUSD), which recently surpassed a market capitalization of $500 million, having almost doubled in value in the past month alone.
This conscious branch out into the world of decentralized finance and cryptocurrency could offer further opportunities for growth in a fintech landscape that’s ripe for further innovation.
Nu Holdings Ltd. (NU)
Source: fatmawati achmad zaenuri/Shutterstock
One fintech stock that’s shown plenty of strength since its 2021 Wall Street debut is Hu Holdings Ltd. (NYSE:NU). Operating a digital banking platform in Latin American nations like Brazil, Mexico and Colombia, the firm has become a leading fintech firm throughout the region.
The company provides access to credit and debit cards, mobile banking, savings accounts, cryptocurrency trading and a series of other investment products.
As a market-leading challenger bank in Latin America’s growing fintech ecosystem, investors have plenty of optimism for the long-term prospects of Nu Holdings. Third-quarter data suggests that as many as 50 hedge funds have been bullish on NU, growing from 44 expressing positive sentiment toward the stock during the prior quarter.
Moreover, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) has underlined its commitment to Nu Holdings by holding more than 107 million shares worth $776.6 million.
The biggest growth factor for Nu Holdings in Q3 2024 stems from the brightening economic ecosystem in Latin America. 2023 saw the average inflation rate of the region reach 14.41%, making LatAm’s recent inflation issues far greater than the global average.
While consumer confidence is still struggling for momentum in the region, we can expect better fiscal control in Q3 2024 to pave the way for growing consumer confidence and more frequent usage of financial services in Latin America. This could help the stock rally beyond the 58.55% growth Nu Holdings has already achieved in the first half of 2024.
On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Read More
