The hype surrounding various digital wallet stocks has “cooled off” a bit in recent years. Although many tech stocks have enjoyed relief rallies this year, many of the pure-play fintech firms behind some of the most popular digital wallet products are still down a great deal from their all-time highs.
For opportunistic tech investors looking to obtain growth at reasonable multiples, it may be worthwhile to open one’s wallet to the following trio of top fintech innovators as they look to gain some sort of ground going into the new year. Many of the fallen digital wallet plays have newfound momentum behind them, making them pretty compelling to watch on the way up.
Indeed, digital wallets may not be a unique innovation any more, as a multitude of tech and financial companies have swarmed into the space in recent years. Despite the rise in industry competition, though, a handful of digital wallet players still possess distinct advantages that could help them lead the pack over the course of the next decade. Let’s have a brief look at three of my favorite fintech wallet plays in this piece.
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Coinbase (NASDAQ:COIN) is the firm behind the popular crypto exchange platform. The stock has been on an impressive run so far this year, with a massive 270% gain year to date. Despite this newfound momentum, shares of the publicly traded crypto play are still down more than 62% from its 2021 all-time highs of around $342 per share.
The crypto markets aren’t as hot as they used to be. It is “crypto winter,” after all. But that’s exactly why I view a firm like Coinbase as intriguing from a value perspective if you’re still a believer in the crypto asset class and its ability to retain value (or grow) over the long run.
For now, it seems like Coinbase is well-positioned to ride out what remains of winter en route to a sort of “crypto spring.” And that makes it one of the most interesting digital wallet plays right now.
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PayPal (NASDAQ:PYPL) is a digital wallet play that’s continued to be on an ugly ride this year, with shares down 22% year to date. As competitors continue to claw away at the digital wallet scene, PayPal likely needs to take drastic action to win back the many shareholders who’ve jumped ship in recent years.
Sub-par third quarter results didn’t help PayPal gain any sort of meaningful ground, even as the market marched mostly higher for November. Newly minted CEO Alex Chriss could be the catalyst the fintech darling needs to bring PayPal out of its multi-year depths. For now, PayPal is a sinking ship. Whether or not it is at the bottom of the sea remains the million-dollar question.
With the firm hitting an SEC snag with its U.S. dollar stablecoin, PayPal USD, which launched back in August, the new year remains full of uncertainty as PayPal looks to tap into new arenas to jolt its growth.
In any case, PayPal stock stands out as one of the cheapest digital wallet stocks while it’s going for just 17.3 times trailing price-to-earnings (P/E).
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Block (NYSE:SQ) stock recently turned a corner, blasting off over 60% from its October 2023 lows, thanks in part to quarterly result that weren’t nearly as bad as analysts expected. Revenue came in at $5.62 billion for the quarter, topping estimates of $5.44 billion, as Square and Cash App posted positive sales growth.
Additionally, Jack Dorsey’s fintech firm delighted investors by raising the bar on its full-year guidance. Though Block stock’s recent surge is encouraging, the firm still faces stiff competition in the digital wallet scene. In any case, it’s hard to deny the popularity of Cash App as Block looks to keep making its digital wallet even better over time.
As a crypto enthusiast, CEO, and “Block Head,” Jack Dorsey may have the expertise to outdo the likes of PayPal as crypto leads a new path for the digital wallet industry.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.
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