Our theme of Fintech Stocks – which includes digital payments and lending players, card networks, and insurance technology players – remains down by about 1% year-to-date, compared to the broader S&P 500 which has gained 17% year-to-date. Square-Afterpay Deal Puts Fintech Stocks Back In Focus The declines are due to the company’s rich valuations and its weaker than expected Q2 numbers. Lemonade stock (LMND) has been the worst performer in our theme, declining by about 35% year-to-date. However, things are looking up with vaccination rates improving and the economy opening up following the lockdowns. Visa stock (V) has returned just about 2.5% over this year, as the company saw sluggish cross-border volumes and a decline in consumer spending due to Covid-19.
The company announced last month that it would acquire Afterpay, an Australian buy now, pay later (BNPL) company in a $29 billion, all-stock transaction. Square stock (SQ) was also up by about 22% year-to-date. customers, a move that could put it in direct competition with Robinhood Markets. The company recently indicated that it is updating its app to allow stock trading by its U.S. PayPal stock (PYPL): is up by about 22% year-to-date. Below are some of the recent developments surrounding some of the stocks in our theme. However, we believe that the theme stands to benefit in the long run from multiple trends including the secular shift to digital payments from physical payments, the increasing adoption of e-commerce, and improving financial inclusion in the U.S. The underperformance comes as investors rotate out of technology and high-growth names that rallied big through the pandemic, into cyclical stocks to play the reopening following the Covid-19 lockdowns.
Our theme of Fintech Stocks– which includes digital payments and lending players, card networks, and insurance technology players – remains down by about 1% year-to-date, compared to the broader S&P 500 which has gained 21% over the same period.
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