Top 5 FinTech Stocks To Own

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In this newsletter, we will discuss 5 of the my favorite FinTech Stocks

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Dear friends,

The fintech sector has reshaped the way we think about money, offering everything from seamless digital payments to innovative lending solutions. In this newsletter, we'll spotlight five standout fintech companies: SoFi, Coinbase, Adyen, MercadoLibre, and Nu Holdings. These firms have leveraged technology to address unique market needs, creating opportunities for growth and investment.

This overview will provide a glimpse into each company's business model and potential for future success, designed for investors looking to understand the dynamics of this ever-evolving sector. And remember, our newsletter delivers two deep dives a month, where we go even further into specific stocks and sectors. Consider this your introduction to the fintech landscape, with more detailed insights to come in future editions.

What is Fintech, Anyway?

Before we jump into the top picks, let’s break down what fintech actually means. Short for “financial technology,” fintech is all about using technology to make financial services faster, more accessible, and—let’s be honest—a lot less boring.

Think about how you can send money to a friend with just a few taps on your phone or invest in stocks without having to call up a broker. That’s fintech in action. It’s all about improving how we manage money, whether through digital payments, online lending, or even using AI to help you budget.

The best part? Fintech isn’t just for tech enthusiasts or finance pros. It’s making banking, investing, and borrowing easier for everyday people, which is why this sector has been booming. And as more people get comfortable with these digital tools, companies in this space are seeing huge growth opportunities.

Now that you’ve got a sense of what fintech is all about let’s dive into some of the top players in the game and see what makes them stand out.

SoFi: Redefining Lending for the Digital Age

SoFi started as a student loan refinancing platform, but it’s become much more than that. Now, it’s a one-stop shop for all things finance, offering everything from personal and home loans to investment accounts and cash management services. Their secret sauce? An ecosystem that keeps users coming back. Once someone starts with a loan, they’re likely to explore SoFi’s other offerings, like banking, investing, and even insurance.

One of SoFi’s biggest strengths is its Lending segment, which remains its primary revenue driver. This segment accounted for about 57% of its revenue as of 2024. But it’s not just about lending anymore—SoFi is also making waves with its Technology Platform. This part of the business supports financial services for other companies through platforms like Galileo and Apex, giving SoFi a steady stream of revenue from other fintech players.

Plus, SoFi’s Financial Services segment is growing fast, with a focus on cash management and investment tools that make it easy for users to keep all their financial needs in one place. In Q2 2024, this segment saw an 80% year-over-year revenue jump, highlighting its potential.

Why does this matter for investors? SoFi is building a financial ecosystem that’s sticky. As they continue to cross-sell services, their revenue streams become more diversified, helping them weather economic ups and downs. And with nearly 8.8 million members as of mid-2024, up 40% year-over-year, their customer base shows no signs of slowing down.

Coinbase: The Gateway to Crypto

If you’ve ever thought about buying Bitcoin or dabbling in Ethereum, chances are you’ve come across Coinbase. As one of the largest cryptocurrency exchanges in the U.S., Coinbase has positioned itself as the go-to platform for anyone looking to enter the crypto game. It’s simple, user-friendly, and, most importantly, trusted by millions of users.

Coinbase’s revenue model is built around transaction fees. Every time a user buys or sells a cryptocurrency on its platform, Coinbase takes a small cut. This means that when crypto markets heat up, Coinbase benefits directly. However, the company is working hard to diversify beyond trading fees, which can be volatile.

In 2024, 45.99% of Coinbase's revenue came from Consumer transactions, showing that everyday users are a key driver of its business. However, Coinbase has also been expanding its Blockchain Rewards and Institutional offerings. For example, it has been helping institutions securely hold large amounts of crypto and even earn interest through staking. This segment is smaller, but it has the potential to grow as institutional interest in crypto rises.

A big part of Coinbase’s strategy involves interest income, a segment that made up 5.59% of its total revenue in 2023. This comes from the cash held on their platform, offering another revenue stream that isn't tied directly to the ups and downs of crypto trading.

Let’s not forget their Monthly Active Users (MAUs)—they had about 8.2 million active users as of mid-2024, with a growth rate of 12.33%. This shows that despite crypto’s rollercoaster nature, Coinbase is holding onto its user base, which is crucial for its long-term success.

For investors, Coinbase offers a way to tap into the potential of the crypto market without directly owning digital assets. It’s a bet on the future of crypto adoption, with the company positioned as a key player whether Bitcoin is at a peak or a trough.

Nu Holdings: Bringing Banking to the Underbanked

Nu Holdings, also known as Nubank, is making waves in Latin America’s financial scene. As one of the world’s largest digital banks, they’ve found success by offering easy-to-use financial services to people who have been underserved by traditional banks. Think of it as a full-fledged bank, but without the branches, long lines, or outdated processes.

Nubank started in Brazil, offering a no-fee credit card that quickly became a hit among consumers who were tired of paying high fees. But they didn’t stop there. Today, they’ve expanded their services to include digital accounts, personal loans, and even insurance products, all through a sleek app that makes managing money simple.

Their focus on making banking accessible has paid off. As of Q2 2024, they had a whopping 104.5 million customers, with 87.2 million being active users. That’s a 26.74% year-over-year growth in monthly active users, which shows just how fast they’re growing in a market with huge demand for better banking options.

Nu’s revenue model is diverse, too. A big part comes from interest income—things like credit cards and loans—bringing in $2.38 billion in Q2 2024. But they’re also seeing steady growth in fee and commission income, which includes services like transaction fees and payments, contributing $465.4 million in the same period. This balance between interest and fee-based revenue gives them stability in different economic conditions.

While Brazil remains Nu's core market, It has also expanded to Mexico and Colombia, aiming to replicate its success across the region. In Q2 2024, Brazil made up 93.22% of Nu's total revenue, showing its dominance in its home market but also highlighting the growth opportunities in new markets like Mexico and Colombia.

For investors, Nu Holdings offers a chance to tap into the rapidly expanding Latin American fintech space. With a focus on simplicity, low fees, and digital-first banking, they’re capturing market share quickly, making them a compelling story in the world of emerging market fintech.

Adyen: The Payment Processor Powerhouse

Adyen might not be a household name like some other fintechs, but behind the scenes, it’s powering the payment systems of some of the world’s biggest companies. Think of Adyen as the engine that makes digital payments possible, whether you’re shopping online, tapping your card at a retail store, or paying through a subscription service. Their secret? A seamless platform that handles transactions across different regions and payment methods, making things easier for businesses and their customers.

Adyen's three main business segments are Digital Payments, Unified Commerce, and Platforms. The Digital Payments segment is the heavyweight, processing a huge €399.9 billion in transaction volume, which made up about 65% of the total processed volume in 2024. This segment supports online transactions, from digital content and gaming to subscription-based services.

Then there’s Unified Commerce, which integrates online and in-store payments for a smooth shopping experience. Think of it as the bridge between online and brick-and-mortar sales, especially important for big retail brands. In 2024, this segment saw 29% year-over-year growth, with a notable 55% growth in the hospitality sector. It’s a sign that as businesses adapt to a hybrid shopping world, Adyen is right there with them.

Finally, Platforms play a crucial role in Adyen’s growth. This segment helps marketplaces and software platforms process payments. It’s a smaller part of their business—making up 13% of total volumes—but it’s growing quickly, with 59% year-over-year growth, even without the boost from eBay, their former big client.

Adyen’s revenue mix is equally interesting. In Q2 2024, they pulled in €1.19 billion from Settlement Fees, representing about 58% of their total revenue. This steady income stream comes from helping businesses manage their payment flows, making it a crucial part of Adyen’s stability.

For investors, Adyen offers exposure to the ongoing shift towards digital payments. With its global reach and focus on making payments easier for businesses, it’s well-positioned to keep growing as more and more transactions move online. Plus, its ability to integrate different payment channels makes it a key player in the evolving world of e-commerce.

MercadoLibre: E-commerce Meets Fintech in Latin America

MercadoLibre is a name that often comes up when discussing the e-commerce boom in Latin America, but there’s more to this company than just online shopping. While they’re known as the “Amazon of Latin America,” their real superpower lies in combining e-commerce with fintech, creating an ecosystem that serves millions across the region.

MercadoLibre’s business has two main engines: Commerce Services and Fintech Services. The Commerce Services segment is the heart of their marketplace, providing sellers with the tools to reach a massive audience. In 2024, this segment brought in $8.39 billion, or 47% of their total revenue. But they’re not just about selling products—they’ve also invested heavily in logistics, ensuring that deliveries get to customers faster, even in challenging markets.

Then there’s the Fintech Services segment, which is growing fast. MercadoLibre’s fintech arm, MercadoPago, started as a way to process payments on their platform but has since expanded into a full suite of financial services. From digital wallets and point-of-sale systems to offering credit to both buyers and sellers, MercadoPago is helping to bring financial inclusion to millions. In Q2 2024 alone, this segment generated $1.22 billion, making up about 24% of its total quarterly revenue.

One of the company’s most impressive achievements is its Credit segment, which brought in $875 million in Q2 2024. This segment allows MercadoLibre to lend to users who might not have access to traditional banking. It’s a higher-risk play but offers significant upside as the demand for credit continues to grow in Latin America’s emerging markets.

MercadoLibre’s approach of blending e-commerce with financial services has made it a cornerstone of the digital economy in countries like Brazil, Mexico, and Argentina. With 53% year-over-year growth in commerce revenue and a 28% jump in fintech services, they’re showing no signs of slowing down.

For investors, MercadoLibre offers a unique way to benefit from both the growth of online shopping and the rise of digital banking in Latin America. By tackling two massive opportunities at once, they’re building a business that’s well-positioned for the long haul.

Wrapping Up: Fintech's Bright Future

So there you have it—five fintech powerhouses making their mark in the world of digital finance. Whether it’s SoFi’s all-in-one financial ecosystem, Coinbase’s role as a gateway to the crypto world, Nu Holdings’ mission to bring banking to underserved communities, Adyen’s behind-the-scenes magic in global payments, or MercadoLibre’s blend of e-commerce and fintech, each of these companies has carved out a unique space in the market.

While this was just a quick look, remember that we dive even deeper into individual stocks and sectors twice a month in our premium deep dives. Fintech is a rapidly evolving space, and staying up-to-date on the latest trends and innovations is key to spotting opportunities.

Cheers,

The Bean Team

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