AFRM, UPST, SOFI, PYPL: Why Are Fintech Stocks Down Today?

Today’s been quite a rocky day for a wide range of fintech stocks. Investors in Affirm (NASDAQ:AFRM), Upstart (NASDAQ:UPST), SoFi (NASDAQ:SOFI) and PayPal (NASDAQ:PYPL) were all down considerably today. These stocks dropped 9.8%, 9.9%, 7.7%, and a whopping 24.7% today, respectively.

A hand lingers over a bright blue tech wheel that says "fintech."
Source: Wright Studio /

There’s a lot to unpack with these companies and their overall performance. However, it’s clear that PayPal is leading the pack in terms of losses today.

PayPal’s massive down day is a result of rather weak Q1 guidance, and otherwise underwhelming results. The company reported a key pivot in its customer acquisition strategy, something investors didn’t seem to be too fond of today.

Affirm, Upstart and SoFi are all names that have been under significant pressure in recent months. These companies are each ones with valuation multiples many investors had difficulty squaring last year. To start this year, it appears the market is doing its job and right-sizing these companies (at least, from a sizable cohort of value investors).

Let’s dive into what sort of concerns investors appear to be pricing into fintech stocks right now.

Fintech Stocks Tumble Once Again Today

In general, it appears the market is taking an increasingly bearish view of fintech stocks. During this recent bull market mania we saw materialize over the past couple years, companies like PayPal, Affirm, Upstart and SoFi have been viewed as growth leaders. Indeed, in terms of top-line growth, there’s a lot to like.

However, some pundits are suggesting investors may be less enamored by some of the products these companies have gone after to spur growth. Services like no-fee overdrafts and early paycheck access sound great. And they certainly do entice customers to come through the digital front door. But the question is, are these the kinds of customers these fintech companies really want?

Accordingly, in this age of competition, these fintech companies will need to find ways to expand margins. Much of the top-line growth that’s come of late may be unattractive to some investors. And with PayPal’s growth failing to accelerate today, concerns may be that these three other big names will post similar results.

On the date of publication, Chris MacDonald did not have (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 Publishing Guidelines.

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