5 Best Fintech Stocks to Buy in December 2021

The fintech industry is among the most exciting investment opportunities for the next decade. This year several fintech companies like Coinbase and Robinhood have listed. These new-age fintech companies are giving tough competition to traditional banks and are snatching away their market share.

Notably, last year Chinese fintech company Ant Financial which is backed by Alibaba was set to list and command a market cap in excess of JP Morgan Chase which is the largest US bank. However, the IPO was blocked by Chinese authorities. What are the five best fintech stocks that you can buy in December 2021?

1. SoFi (NYSE: SOFI)

SoFi went public earlier this year through a reverse merger. It’s a diversified fintech company with several businesses including mortgages, student loans, and stockbroking. SoFi reported total revenues of $272 million in the third quarter, which was 35% higher than the corresponding quarter last year. The company posted an adjusted EBITDA of $10.2 million in the quarter, which was its fifth consecutive quarter with a positive EBITDA. It was a record quarter for SoFi in terms of revenues, but its adjusted EBITDA was lower as compared to the third quarter of 2020.

Jim Cramer finds SoFi a good fintech stock to buy

Jim Cramer is among those who are bullish on SoFi stock. “[CEO] Anthony Noto is doing a very good job there. Frankly, they did a secondary. It crushed the stock. You know, the stock popped. People felt like they got hurt by it when the secondary occurred, and now I think it’s bottomed,” said Cramer.

Notably, SoFi had gone for a secondary stock issue, and also Chamath Palihapitiya had sold some of his stake in the company. This led to a fall in the stock price. Also, the company’s bank charter is still awaited. Analysts see the bank charter as a key long-term driver for the stock.

That said, if you are looking for a fintech stock to hold for the long-term SoFi looks a good fit. The company has a diversified business model and trades at attractive valuations.

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2. Block (NYSE: SQ)

If you are thinking of buying a fintech stock, it is hard to miss Square. The company recently changed its name to Block, in what looks like a way to portray the growing importance of blockchain and cryptocurrencies for the company.

Block has been diversifying its business to focus on cryptos. The company has also invested in bitcoin. Block CFO Amrita Ahuja believes that there is a $100 billion TAM (total addressable market) for the company’s Seller App and a $60 billion TAM for its Cash App. Currently, Block only has a 2-3% share of these markets. Currently, the company has a low single-digit market share in both these ecosystems but is gradually increasing the market share. Apart from millennials, the company is also targeting older demographics now.

Block is a must-have fintech stock

Overall, Block is a must-have fintech stock. The company’s CEO Jack Dorsey has quit his position as Twitter’s CEO and would now be able to focus more on Block. The stock has fallen sharply from the peak and the valuations now appear quite reasonable.

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3. Robinhood (NYSE: HOOD)

Robinhood went public this year. While the stock had a dismal listing, it surged thereafter. After its third-quarter earnings release, which showed a fall in revenues and active users, led to a fall in the stock. Several analysts also turned bearish on the company. The stock recently hit a 52-week low but has since rebounded from those levels.

Cathie Wood finds HOOD as a good fintech stock

Cathie Wood finds HOOD a good fintech stock to buy and has bought the dip in the stock. HOOD’s transaction-based revenue fell to $267 million in the third quarter. Crypto trading accounted for only $51 of the total transaction-based revenues in the quarter. Notably, in the second quarter, crypto accounted for over half of Robinhood’s transaction-based revenues. Within cryptos, dogecoin was the majority contributor. However, as the fortunes of dogecoin fell, so did the revenues of Robinhood. Notably, HOOD only has a handful of cryptos on the platform which is hurting its earnings.

Meanwhile, Robinhood plans to become a diversified fintech company and along with stock trading, it also plans to offer services like staking and lending. It is also testing a crypto wallet and also intends to launch more serious financial products like IRS.

After the recent crash, Robinhood looks among the best fintech stocks to buy in December and bet on the company’s strategy of becoming a full-fledged financial company from a stockbroker.

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4. Affirm (NYSE: AFRM)

Buy-now-pay-later (BNPL) company Affirm also went public earlier this year. The company was originally planning to list last year but delayed the IPO to this year in order to increase the IPO pricing. Despite having increased the IPO price, the stock surged on the listing. However, it fell thereafter.

Affirm is a good fintech stock in the BNPL industry

Meanwhile, the company announced a deal with Amazon which led to a buying spree in the stock. There has been a massive appetite for BNPL companies and even names like Apple are targeting the industry. Within the BNPL space, Affirm looks like a good fintech stock to buy in December. The stock has come off its 2021 highs but looks among the best fintech stocks to buy and hold for the long term. Jim Cramer is also bullish on the stock.

Wall Street analysts are also bullish on Affirm stock and consensus estimates call for an upside of 43% over the next 12 months.

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5. ARK Fintech Innovation ETF (ARKF)

ETF investing has become very popular and total ETF assets are now around $7 trillion. If you want to build a portfolio of retail stocks without having to worry about selecting and buying individual stocks, you can consider an ETF.

Cathie Wood’s ARK Fintech Innovation ETF is one ETF that you can consider. Wood’s ETFs, including the flagship ARK Innovation ETF, has been under pressure this year. However, if you want to play the fintech industry for the long term, ARKF looks like a good bet.

ETFs can be a good investing strategy especially for investors who lack the time or analytical skills to pick individual stocks. While ARKF’s expense ratio is higher than other ETFs, it’s because it’s an actively managed fund. The ETF should bounce back in 2022 after a dismal run this year.

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