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Fintech & Payment Stocks In Focus: PYPL, SQ, MA, V, AXP - YouTube
Channel: TD Ameritrade Network
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we've got caleb silver the
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editor-in-chief at invista investopedia
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and george michelos a senior analyst at
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cowan thanks for joining the show today
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guys george i'm going to come to you
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first we've seen the disruptors in the
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fintech space spike higher over the last
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couple years his adoptions ramp ramped
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up but
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growth in this sector continues to
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expand but do you feel that this is
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going to continue or we're starting to
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get towards uh the saturation point here
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yeah i i i think globally speaking
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there's still plenty of growth uh uh to
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go both in terms of some of these newer
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entrants that i think you reference tom
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some of the uh uh the more digitally
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enabled players but also even for some
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of the you know i'm going to use the
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moniker of legacy the more traditional
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guys that are out there
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i think what's being missed is that
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simultaneously both of these sort of uh
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you know different constituencies within
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payments uh can continue to grow and i
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think when you're looking at a lot of
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these sort of upstarts the digital
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enablers of the world uh you know 20
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plus growth rates somewhat higher than
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that for the likes of square are
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certainly still on the table uh but if
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we're looking at some of the more i
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guess what i'd call traditional guys
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whether it's uh um you know the legacy
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processors of fis global and uh and
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pfeister
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those entities themselves i don't see
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them uh posting post pandemic rates of
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growth that are going to be lower than
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what they were doing pre-pandemic and i
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think there's a little bit of a uh a
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disconnect in the market in that regard
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yeah and i think uh caleb if you look at
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this uh the divergence that we've seen
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maybe in some of the stock prices
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between those legacy players like
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mastercard and visa and some of the new
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uh disruptors in the space the modern uh
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the modern names uh which ones are you
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looking at here uh you know for uh you
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know maybe growth on top of what they've
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already done as they expand their
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footprint
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yeah no question we're living in the
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land of the giants though george alluded
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to it but just think of some of these
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numbers visa traditional play it's a
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processor let's not be let's not be uh
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kid ourselves about a mastercard 345
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billion dollar company paypal 337
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billion dollars we haven't even talked
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about stripe which is private valued at
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about 90 billion dollars probably the
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highest valuation in silicon valley
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right now so these are big players and
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they have room to grow in this space you
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wonder why paypal now wants to maybe
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consider starting a brokerage these big
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players want to surround the entire
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ecosystem yes we have upstarts like the
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fidelity information services the phi
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serves the global payments and the green
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dots of the world they're going to have
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a lot of work cut out for them if they
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want to catch up because apple amazon
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google they control these ecosystems and
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then there's paypal which is massive as
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well it's going to be a big challenge i
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wouldn't be surprised to see some of
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these smaller competitors getting
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scooped up and bought out
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yeah and george if you look at this
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space and it's not only payments right
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it's uh there it's a wide swath of what
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they're getting themselves into uh as
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they disrupt different industries uh
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maybe it's going to be insurance as a as
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the next arm uh or uh you know same day
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or
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buy now pay later we've already seen
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that with the firm and after pay and
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such which areas in this uh sector do
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you feel has the best growth opportunity
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moving forward is it the squares and
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paypals or is it some of those offshoots
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yeah i think i think those next-gen
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names that you highlighted are on square
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and paypal they're going to continue to
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have outsized rates of growth and i
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think what you're seeing what you're
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alluding to with all these different
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functionalities that are being sort of
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layered in uh to what were you know core
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capabilities around payments and p2p and
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the like you're seeing the development
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of these sort of super apps i like to
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call it sort of the the swiss army uh uh
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digital wallet if you will and i think
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the idea behind that uh is more around
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continuing to expand consumer engagement
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how can i get you to do more
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uh with my solution uh beyond just again
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what what what i would have considered
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uh you know a couple years ago p2p and
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payments being sort of the core of what
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they're doing so those those trends are
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going to continue you're going to see
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more of that uh
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going forward i don't think there's
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going to be any change i think you'll
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continue to see consolidation and more
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and more of these solutions being added
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to the digital wallets as i you know in
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many cases certainly in the case of
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square uh sort of become you know defanc
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de facto bank accounts uh for uh for
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many of these users
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uh and caleb if you look at this segment
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as the expansion and footprint uh you
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know widens out here
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maybe m a activity takes place like you
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mentioned but does this start to hurt
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the margins of this business and uh you
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know the the potential for it
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potentially but if you look at so sort
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of who these big processors are apple's
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already controlling about 10 percent of
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online payments so they're it's not
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hurting their margins at all this is
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only improving it into georgia's point
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they want to control the ecosystem they
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want to be the swiss army knives i think
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a lot of young people don't even have
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traditional bank accounts they just rely
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on the pay pals and demos of the world
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to to do their transactions but then you
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got to look globally at what's going on
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this is a global market of payment
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processing transactions so obviously
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apple pay amazon google pay we all know
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about them but phone pay uh mercato
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libre the big e-commerce player in latin
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america also offering payment
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transaction solutions as well alipay
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owned by alibaba that's massive uh mir
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in russia and then the state bank of
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india so there's plenty of margin growth
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out there around the world but you're
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going to see the big dominant players
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probably control this as they control
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all the all the other ecosystems that
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they participate in i think margins for
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the smaller players are going to be
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harder and harder to come by which is
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why you see them diverging into other
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services because they're looking for
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areas where they can attach some growth
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and get those multiples but it's going
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to be hard to catch up to the giants
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and to that point uh george if you look
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at this uh you know crypto trading uh
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you know big portion of what the the
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revenue generation from some of these
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startups maybe that's why they've been
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outperforming but as that becomes maybe
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more widespread uh do you believe that
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uh maybe that's not a growth area for
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maybe some of these names like square
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and paypal
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no quite quite the contrary i think uh i
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think areas like crypto and i think even
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to some extent when you see some of
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these deals that even a visa and
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mastercard have with the likes of circle
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uh and other other sort of uh uh
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stablecoin providers uh i think they
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very very much will play a role uh
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within that ecosystem and if you look at
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what paypal is basically trying to do
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it's facilitating payments albeit via
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conversion to fiat uh with with crypto
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so i i very much think they're going to
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continue to be engaged square probably
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is a bit more of a wider strike zone
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they certainly were there earlier uh
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enabling bitcoin and the like purchases
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they're more focused specifically on
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bitcoin uh than i think some of the
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other uh uh
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cryptocurrencies or blockchain
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methodologies that are out there but uh
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i definitely think that that's going to
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be another area uh where all these new
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entrants on the digital side and and
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again even even the networks uh are
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going to be looking to play a role
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yeah and uh caleb just real quick if you
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can give me one name that you're focused
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on the most maybe in this uh spaces uh
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for growth name
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yeah i mean i'm looking at stripe i
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can't wait for stripe to file to go
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public i think that's going to be a
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massive ipo um i think they're going to
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have a lot of big players surrounding
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them as they go public and maybe wanting
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to acquire them or partner with them i'm
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keeping an eye on strike private company
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right now but watch for it to maybe ipo
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this year or next all right great
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discussion here guys appreciate it very
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much that's caleb silver the editor in
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chief at investopedia and george mihalos
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a senior analyst at cowen
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you
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