In this article, we discuss 5 fintech stocks getting hammered amid economic weakness. If you want to see more stocks in this selection, check out 10 Fintech Stocks Getting Hammered Amid Economic Weakness.
5. Marqeta, Inc. (NASDAQ:MQ)
YTD Share Price Decline as of July 28: 48.06%
Number of Hedge Fund Holders: 39
Marqeta, Inc. (NASDAQ:MQ) is a California-based company that operates a cloud platform offering card issuing and transaction processing services to developers and entrepreneurs. As of July 28, Marqeta, Inc. (NASDAQ:MQ) stock has plummeted about 48%. On June 17, Mizuho analyst Dan Dolev maintained a Buy rating on Marqeta, Inc. (NASDAQ:MQ) with a $12 price target. He said it was “encouraging” to see Marqeta, Inc. (NASDAQ:MQ)’s “relative recession resiliency, progress in disrupting the credit issuer processing market, and awareness that profits matter to investors”. The analyst also reaffirmed that resolving key overhangs could help drive shares of Marqeta, Inc. (NASDAQ:MQ).
Among the hedge funds tracked by Insider Monkey, 39 funds were bullish on Marqeta, Inc. (NASDAQ:MQ) at the end of the first quarter of 2022, with collective stakes worth about $959 million. Mick Hellman’s HMI Capital featured as the largest stakeholder of the company, with 25.6 million shares valued at roughly $283 million.
Here is what Alger Spectra Fund has to say about Marqeta, Inc. (NASDAQ:MQ) in its Q4 2021 investor letter:
“Marqeta facilitates the implementation of digital payment technologies. It is a Positive Dynamic Change beneficiary in the digital payments industry. We believe as more commerce is conducted digitally, the digitization and transformation of the payments ecosystem is needed, which Marqeta seeks to address through its modern payment card issuing platform, providing infrastructure and tools for buiqding configurable payment cards. Marqeta offers issuer processor services and acts as a card program manager. Its platform creates customized payment cards that provide innovative payment experiences for their clients’ customers and end users.
Marqeta has emerged as a card issuing platform category leader in many disruptive verticals, including on-demand delivery, alternative lending, expense management, disbursement, digital remittances, and digital banks. Marqeta’s solutions are even sought out by large financial institutions to improve their existing offerings and stay competitive with technology-focused new market entrants. Marqeta detracted from performance despite achieving strong revenue growth with higher gross profitability and an expanded customer base in the third quarter. We believe the expiration of a lock up period and the company facing tough comparisons resulting from COVID-19 stimulus payments having boosted consumer spending contributed to the underperformance of Marqeta shares. Additionally, the still small footprints within the Marqeta revenue base of crypto, truck brokerage and business-to-business clients may take time to scale.”
4. Bill.com Holdings, Inc. (NYSE:BILL)
YTD Share Price Decline as of July 28: 44.14%
Number of Hedge Fund Holders: 58
Bill.com Holdings, Inc. (NYSE:BILL) was founded in 2006 and is headquartered in San Jose, California. The company provides cloud-based software that simplifies, digitizes, and automates back-office financial operations for small and medium-sized businesses worldwide. The stock has declined more than 44% year to date as of July 28. Oppenheimer analyst Ken Wong on July 26 initiated coverage of Bill.com Holdings, Inc. (NYSE:BILL) with an Outperform rating and a $150 price target. The analyst thinks Bill.com Holdings, Inc. (NYSE:BILL)’s software-as-a-service technology is “best-in-class and early in its adoption cycle with a very lightly penetrated total addressable market”.
According to Insider Monkey’s data, Bill.com Holdings, Inc. (NYSE:BILL) was part of 58 hedge fund portfolios at the end of Q1 2022, down from 65 funds in the prior quarter. Gabriel Plotkin’s Melvin Capital Management is the leading position holder in the company, with 1.62 million shares worth roughly $368 million.
Here is what Alger Mid Cap Focus Fund has to say about Bill.com Holdings, Inc. (NYSE:BILL) in its Q4 2021 investor letter:
“Bill.com Holdings, Inc., was among the top detractors from performance. Bill.com provides cloud-based software solutions that simplify, digitize, and automate complex back-office financial operations for small and medium size businesses. Its software helps customers to generate and process invoices, streamline approvals, send and receive payments, synchronizing data with their accounting system and manage their cash.”
3. Sea Limited (NYSE:SE)
YTD Share Price Decline as of July 28: 65.55%
Number of Hedge Fund Holders: 77
Sea Limited (NYSE:SE) is a Singapore-based company that specializes in digital financial services across Southeast Asia, Latin America, and the rest of Asia. The company also operates as a digital entertainment and e-commerce provider. The stock has plummeted roughly 66% year to date as of July 28. Daiwa analyst John Choi on July 28 lowered the price target on Sea Limited (NYSE:SE) to $110 from $130 and kept a Buy rating on the shares ahead of the Q2 results. The analyst observed that regardless of the uncertainties in consumption demand and inflationary headwinds, Shopee is likely to “weather through the storm” by enhancing its efficiency and monetization strategies.
Hedge fund sentiment around Sea Limited (NYSE:SE) declined notably in the first quarter of 2022. Among the hedge funds tracked by Insider Monkey, 77 funds were bullish on Sea Limited (NYSE:SE) at the end of Q1 2022, down from 108 funds in the earlier quarter. Chase Coleman’s Tiger Global Management is the leading stakeholder of the company, with 13.5 million shares worth $1.6 billion.
Here is what Baron New Asia Fund has to say about Sea Limited (NYSE:SE) in its Q1 2022 investor letter:
“Sea Limited, a global digital gaming and e-commerce company, detracted from performance for the period held. Similar to other online consumer businesses, Sea faced significant multiple compression in the quarter, exacerbated by a slowdown in user growth at its key Free Fire digital game and mounting investments in its e-commerce operation, particularly in new markets like Brazil. We exited our position as we lost confidence in the long- term unit economics in some of Sea’s new markets and were concerned by the simultaneous slowdown in revenue growth and increase in underlying cash burn.”
2. Block, Inc. (NYSE:SQ)
YTD Share Price Decline as of July 28: 55.64%
Number of Hedge Fund Holders: 84
Block, Inc. (NYSE:SQ) is based in San Francisco, California, and the company provides card payments, reporting and analytics, and next-day settlement. As of July 28, the stock has plunged about 56% year to date. On July 26, Wells Fargo analyst Jeff Cantwell lowered the price target on Block, Inc. (NYSE:SQ) to $120 from $165 and reaffirmed an Overweight rating on the shares ahead of the Q2 results. The analyst noted that the second quarter data from Cash App and Square looks robust, but some headwinds are coming from Afterpay and Bitcoin. The analyst sees mixed results ahead of the Q2 report.
According to Insider Monkey’s data, 84 hedge funds were long Block, Inc. (NYSE:SQ) at the end of the first quarter of 2022, down from 96 funds in the prior quarter. Cathie Wood’s ARK Investment Management is the leading stakeholder of the company, with 8.30 million shares worth $1.12 billion.
Here is what Farrer Wealth Advisors has to say about Block, Inc. (NYSE:SQ) in its Q1 2022 investor letter:
“Block (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”
1. PayPal Holdings, Inc. (NASDAQ:PYPL)
YTD Share Price Decline as of July 28: 55.67%
Number of Hedge Fund Holders: 100
PayPal Holdings, Inc. (NASDAQ:PYPL) is a California-based company operating a technology platform that offers payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy brands. The stock has dropped about 56% year to date as of July 28.
On July 27, after Elliott Management took a position in PayPal Holdings, Inc. (NASDAQ:PYPL), Mizuho analyst Dan Dolev told investors his thoughts on how to optimize the company’s potential. While there have been mishaps, PayPal Holdings, Inc. (NASDAQ:PYPL)’s primary checkout business and Braintree “are much stronger than many perceive”, the analyst said. However, PayPal Holdings, Inc. (NASDAQ:PYPL) spends excessively on research and development, noted the analyst, who sees potential for more than 1,000 basis points of GAAP margin expansion. He kept a Buy rating on PayPal Holdings, Inc. (NASDAQ:PYPL) with a $120 price target.
According to Insider Monkey’s data, 100 hedge funds were bullish on PayPal Holdings, Inc. (NASDAQ:PYPL) at the end of March 2022, down from 110 funds in the last quarter. Ken Fisher’s Fisher Asset Management held the leading stake in the company, with 16.7 million shares worth about $2 billion.
Here is what Wedgewood Partners has to say about PayPal Holdings, Inc. (NASDAQ:PYPL) in its Q2 2022 investor letter:
“PayPal Holdings detracted from performance despite the Company generating healthy growth. Revenue grew +8%, but closer to +15% when adjusted for the well-telegraphed roll-off of its eBay relationship. As the Company laps the headwinds of eBay and difficult year ago comparisons, we expect PayPal should drive long-term growth in the mid-teens. Much of this will be driven by further penetration into the Company’s nearly 450 million active users. PayPal’s user base has grown by +50% since the onset of the pandemic so it makes sense for management to focus on driving higher transactions per account and better monetize this historical windfall of users. In our opinion, the shares have discounted away all of PayPal’s pandemic user and revenue gains, so we added to positions during the quarter.”
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