MW 20 fintech companies expected to grow rapidly through 2026, including Upstart
By Emily Bary and Philip van Doorn
These innovators are expected to increase revenue at multiples of expected growth rates for the S&P 500
This year's hot streak for financial-technology stocks cooled in recent days, as Wall Street weighed in on the prospect of fewer interest rate cuts by the Federal Reserve next year than once expected.
But there are still plenty of fintech names poised for strong sales growth, including companies expected to benefit from a better lending backdrop and potentially more favorable banking policies once President-elect Donald Trump takes office for his second term.
When looking at anticipated compound annual revenue growth rates (CAGR) over the next two years, Upstart Holdings Inc. $(UPST)$ is among the fintech sector's leaders at 28.8%. Analysts project a big rebound for the company, which uses artificial intelligence to inform lending decisions but has seen pressure on its business in recent years because of jitters among some funding partners as well as a reluctance from some customers to take out personal loans at high interest rates. The company's revenue growth could reignite as interest rates come down and make its personal-lending services more appealing.
Analysts see Upstart's revenue growing to $821.9 million in 2025 from an estimated $599.1 million in 2024, though even the 2024 total would be down from the company's peak annual total of $848.6 million seen during 2021. But come 2025, analysts foresee a record annual total of $994.5 million.
SoFi Technologies Inc. (SOFI) is also expected to be a beneficiary of both the rate environment and Trump's presidency, though the financial-technology company has fared better than Upstart from a growth perspective in recent years. SoFi has seen sales climb from $566 million in 2020 to an estimated $2.5 billion this year, and analysts' estimates imply a 18.8% revenue CAGR through 2026.
Affirm Holdings Inc. $(AFRM)$ has grown recently as well, as its buy-now-pay-later offerings have gained further steam. Looking to the next two years, the company ranks ninth on our recent screen of fintech growers, with a 26.0% sales CAGR expected through the period.
Jefferies analyst John Hecht recently upgraded Affirm's stock, saying that the company "has shown its ability to grab larger share of a growing BNPL market, suggesting upside revenue potential."
While not cracking the top 20, Visa Inc. (V) and Mastercard Inc. $(MA)$ are expected to show revenue CAGR of 9.8% and 12.1%, respectively, over the next two years. Those compare with an expected two-year sales CAGR of 5.6% for the S&P 500 financial services sector and 5.9% for the full S&P 500 SPX.
Shares of Visa and Mastercard are just off record highs clinched earlier this month, and their management teams continue to strike confident tones about the stable consumer spending backdrop. Meanwhile, both payment-technology giants have fast-growing businesses in value-added services like fraud prevention and marketing.
Screening financial technology stocks for expected sales growth
Since there is no narrow definition of fintech, we began our screen with the components of two exchange-traded funds:
-- The Global X FinTech ETF FINX was established in 2016 and has $321 million in assets under management. This fund holds 63 stocks weighted by market capitalization. It tracks an index of companies in developed markets that are considered innovators in payment processing, marketplace lending, digital currencies and traditional financial services, such as banking and asset management. The fund has returned 24.5% this year through Thursday, with dividends reinvested.
-- The iShares FinTech Active ETF BPAY was established in August 2022 and has only $5 million in assets under management. It holds 36 stocks and takes a global approach to selecting fintech innovators.
The two ETFs together hold 82 stocks. For the revenue estimate screen we pared the list to 62 companies with market capitalizations of at least $1 billion that are covered by at least five analysts polled by FactSet and for which consensus sales estimates are available through calendar 2026. The calendar-year estimates are adjusted by FactSet for companies whose fiscal years don't match the calendar.
Here are the 20 companies that screened highest for expected sales CAGR from 2024 through 2026:
U.S. Ticker Country Expected sales CAGR from 2024 through 2026Held by Cipher Mining Inc. CIFR U.S 94.1%FINX Hut 8 Corp. HUT U.S 75.1%FINX Riot Platforms Inc. RIOT U.S 54.9%FINX Galaxy Digital Holdings Ltd. CA:GLXY U.S 35.6%FINX MARA Holdings Inc. MARA U.S 34.2%FINX Upstart Holdings Inc. UPST U.S 28.8%FINX Lemonade Inc LMND U.S 28.7%FINX DLocal Ltd. DLO Uruguay 26.7%FINX Affirm Holdings Inc. Class A AFRM U.S 26.0%FINX Nu Holdings Ltd. Class A NU Cayman Islands 24.6%BPAY Adyen N.V. NL:ADYEN Netherlands 24.4%FINX, BPAY Flywire Corp. FLYW U.S 24.2%FINX Shift4 Payments Inc. Class A FOUR U.S 23.1%FINX, BPAY Inter & Co. BR:INBR32 Brazil 22.8%BPAY Toast Inc. Class A TOST U.S 21.7%FINX LendingClub Corp. LC U.S 19.9%FINX Xero Ltd. AU:XRO New Zealand 18.9%FINX SoFi Technologies Inc. SOFI U.S 18.8%FINX Zip Co. Ltd. AU:ZIP Australia 18.2%FINX HUB24 Ltd. AU:HUB Australia 16.5%FINX Source: FactSet
You should do your own research and form your own opinion before making any investment. One way to begin that process is to click on the tickers for more about each company, ETF or index.
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-Emily Bary -Philip van Doorn
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December 20, 2024 10:17 ET (15:17 GMT)
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