We recently compiled a list of the 13 Most Promising Fintech Stocks to Buy. In this article, we are going to take a look at where Mastercard Incorporated (NYSE:MA) stands against the other promising fintech stocks.
Global Fintech at a Glance
According to a report by Expert Market Research, the global fintech market was valued at $226.71 billion in 2023 and is expected to grow to $917.17 billion by 2032, at a compound annual growth rate of 16.8% between 2024 and 2032. CNBC has unveiled a comprehensive distribution of the fintech industry by category. Payments make up 20%, alternative finance 16%, neo banking 14%, wealth technology 12%, business process solutions 10%, financial planning 8%, banking solutions 10%, and digital assets 6%, of the industry.
The fintech market has witnessed a surge in growth over the last decade and continues to show resilience and strength. In research conducted by the World Economic Forum, 51% of fintech companies cited strong consumer demand for their services to be the main driver of growth. This trend remained consistent across all regions. Digital innovation by such fintech companies operating in developing economies has simply helped people escape the traditional banking system.
While the booming fintech sector is meant to offer the best of both worlds which means innovative banking and cutting-edge technology alongside safety, customers have recently encountered problems with safety and security. An estimated 100,000 Americans who were customers of fintech apps were locked out of their banking accounts in early May. This was after the bank-fintech middleman Synapse Financial Technologies filed for bankruptcy in April which led to the freezing of accounts for customers of its partner banks. Although the fintech apps in this scenario were relatively smaller as compared to dominant players, Hugh Son questioned the safety of the fintech model where fintechs partner with banks which is also followed by Chime and PayPal, in a talk with CNBC.
Regarding this, there has been a positive development for those using fintech apps whose funds can get stuck in case of a mishap. Recently, the U.S. banking regulator, Federal Deposit Insurance Corp, proposed strengthened rules for banks working with fintech companies. Under these rules, such banks would have to identify the beneficial owners of each account and its balance. Hence, the proposal would ensure that third parties like Synapse would be allowed to maintain the records as long as the bank retains unrestricted access to that data even in the event of a middleman’s bankruptcy.
Our Methodology:
In order to compile a list of the 13 most promising fintech stocks to buy, we first sifted through ETFs and online rankings to gather a preliminary list of 30 such stocks. We then selected the top 13 stocks that had the highest upside potential. The 13 most promising fintech stocks to buy are arranged in ascending order of their average upside potential, as of September 30. We have also supplemented our ranking with the number of hedge funds held by every stock, as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A woman using a payment terminal at the checkout of a store showing payment products and solutions.
Mastercard Incorporated (NYSE:MA)
Average Upside Potential: 7.37%
Number of Hedge Funds: 142
Mastercard Incorporated (NYSE:MA) is a global payment technology solutions company. The firm connects consumers, merchants, government, digital partners, and businesses worldwide by enabling electronic payments. Mastercard’s purpose revolves around powering an inclusive digital economy that tends to benefit everyone, everywhere.
Mastercard Incorporated (NYSE:MA) serves as a payments industry leader which is currently demonstrating broad-based momentum across all aspects of its business. It makes payments easier and more efficient by providing payment solutions and services using its well-known brands including Mastercard, Maestro, and Cirrus. The firm has been making payments smarter and safer for more than 50 years. It continues to drive growth by winning and retaining deals, expanding in new geographies, and further digitizing the payments ecosystem.
In an attempt to position itself for further and more sustainable growth, the firm announced an organizational structure realignment centered on three interdependent areas of Core Payments, Commercial and New Payment Flows, and Services. While Core Payments works as the company’s foundation, Mastercard finds a scalable opportunity in Payment and data flows beyond consumer card payments. Simultaneously, offerings from Mastercard’s current Cyber & Intelligence, Data & Services, and Open Banking teams remain integrated under Services.
Recently, Mastercard closed another strong quarter across all aspects of its business. During Q2, net revenue increased by 11% which is attributable to growth in the payment network and value-added services and solutions. While payment network net revenue increased by 7%, value-added services, and solutions net revenue increased by 18%. The continued healthy consumer spending and robust cross-border volume growth of 17% supported the strong performance.
The company remains positive about its growth outlook. The diversified business model and focused strategy position sets the company well to capture the opportunities ahead. In conclusion, Mastercard Incorporated (NYSE:MA) is a recognized market leader with material progress to offer. As of Q2 2024, the stock is held by 142 hedge funds.
Overall MA ranks 9th on our list of the most promising fintech stocks to buy. While we acknowledge the potential of MA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than MA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
