Hey everyone kevin here. I've been waiting for a little bit of an intraday dip on some of my favorite fintechs and today is quite frankly, the perfect day to make a video about my favorite fintechs. So jp morgan yesterday attributed a lot of weakness in their credit card business to rising costs for marketing and promotions, because their competition has gotten really intense and they specifically singled out wanting to try to make sure they compete with debit card offerings and other offerings from Buy now pay later platforms like a firm yesterday we saw companies like amex capital, one synchrony discover financial, all drop two and a half to three percent visa was down almost three quarters of a percent and folks where's. The money been going well, a lot of it has been going to companies like sofi and affirm, and in this video i want to just give you a quick little primer on these companies, along with some interesting insights.

In terms of why, personally, i'm very excited about these companies, i'll also talk to you about some of my price projections and and sort of where i think the right value is for these stocks. So that way, you can keep them on your radar. But we'll talk about that in a moment for now, let's get into a background on sofi affirm and remember that if you want insights into which stocks i'm buying before i buy them or right when i buy them, make sure to check out the stocks and psychology Of money group, for example, with a firm when i started buying this in the 80 range, we did private course member live streams. Talking about this move before i made the move, when i made the move after i made the move, and these are some cool opportunities.

Sometimes, to be a part of the discussion on, especially in our chats, where we talk about these so check that out down below there are links to some amazing programs on building your wealth, whether it's the real estate youtube stocks, whatever okay, so uh folks buy. Now pay later, let's talk about this, so there's a lot of competition in the buy now pay later space. We know this a lot of folks like to say that a company like a farm which does buy now pay later, which is where you can go to like target.com and basically pay for a stroller over 12 months. Instead of paying for it right away.

A lot of folks say: ah, these companies have little to no moat and it makes sense because, quite frankly, it probably wouldn't be that hard for retailers to just do buy now, pay later style, layaway like they previously have before themselves or for other credit card companies And merchants to offer buy now pay later as well, but one of the things that makes a firm unique is that it's a buy now play later platform. That doesn't just say, hey, buy it now and pay us in four payments, which is what paypal does, which is what square does, which is what a lot of the platforms do, they just say, buy it now and they pay us in four payments. One payment now and then three more payments once every two weeks. So it's kind of like you pay for a product in about six weeks time which, quite frankly, is kind of, in my opinion, lame because you could just pay for something on a credit card.

And then, by the time your statement closes and your payment actually becomes due, you probably have zero percent interest for six weeks and then pay off your credit card, but anyway buy now pay laters or a firm's moat, with buy now pay later has to do with The fact that a firm's got some pretty big merchant relations to where a firm is actually making longer term deals with companies to offer creative financing for products over not just for payments. This is the big pay in four thing that mastercard does. Paypal does and a lot of the buy now pay later platforms do uh, even apple's considering getting into it. That's not unique.

There's no moat there instead having a merchant relationship where a firm says: hey we'll, do creative financing for 12 24 36 months in partnership with the merchant, that's where the money is and that's what a firm is doing really well and in addition to this, a firm Is now trying to get folks into their ecosystem with buy now pay later, average user uses a firm buy now pay later about 2.2 times. We expect that number to go through the roof to like five to six times per year, but a firm is also offering savings accounts and they just announced that they're going to start offering crypto purchases to sort of become a mega app. This is at least what sort of fintech analysts are starting to call this. In fact, bank of america calls a firm, a mega app and just raised their price target for a firm to a hundred sixty dollars.

Now the stock has hit an all-time high of about 151 before, but we haven't hit that 160 target. Yet and what's interesting is in september, all of the other buy now pay later. Apps saw a deceleration in growth in both monthly app downloads and monthly active users, except for a firm. A firm is the only one that grew at a faster rate.

Of course, you've got after pay owned by square and klarna. Both of these together still have more downloads than a firm. A firm comes in third place at about 22, but from me, like my perspective, that's a growth opportunity uh as they sort of cannibalize more of the of the pie that they share with others and take more for themselves. Now, a firm's also considering offering debit cards, which this is where jp morgan's like yeah.

We are gon na work on competing with this, but i'm not so worried about legacy bank competition uh. It is worth noting, though - and this is a little bit of a potential downside - that about 24 of people bank of america surveyed, who use buy now pay later stuff, like options do so because their credit cards are already maxed, like that's, not good. Okay, like for the good of society, i don't recommend people take on more debt, but anyway, it's worth noting that a firm has something that uh sofi, uh, well a firm and so far different and uh. A firm does have something that sofi does not have, and i'm gon na touch on so far in just a moment.

But i really like this about a firm it's that when you get convinced to use a firm, it's usually not because of a firm's marketing. It's usually because you saw the affirm option on something like target or stubhub or wayfair or whatever. This means a firm kind of gets free customers through the buy now pay later portal advertised by companies like even amazon, with their partnership coming soon. Here in the last quarter of the year, but then they can funnel people into their other products.

Savings accounts, crypto debit cards, whatever kind of brilliant, if you think about it, but anyway, so fine doesn't have this benefit. Sofa spends an insane amount of money on advertising. They branded a stadium, okay, there's a whole sofa stadium. It's crazy now so far in a firm are in different fields.

So far is all about home loans, student loans, retirement accounts, savings accounts also got crypto and that savings which kind of overlaps with a firm. But those are really just things where they're trying to provide you. Other services, like they'll, give you referrals to insurance like if you go to metkevin.com life met kevin.com life to try to sign up for life insurance in as little as five minutes. That's a that's! A referral link, so if you fill out your information and you sign up because you're like hey, this is a great price.

I get paid a small. Thank you well sofi! Does that as well with the same exact company? So, for example, if you go to sofi and you go to life, insurance you'll have the same squeeze page instead of saying meet kevin though it'll say so fine. So it's kind of cool to see that we kind of have the same relationship like me as a big corporation. Like so far, i don't know with that life insurance company.

It seems interesting, but anyway that's just the way they make a smaller portion of their revenue. Most of their revenue comes from lending, which is kind of what a firm does as well, but we're talking here, home loans, student loans, retirement accounts right. These are going to be a little bit different, so 19.1 percent of the revenue at so far comes from stocks and trading. 47 percent is loan originations and sales.

That's pretty big uh and something that's different between sofi and affirm. Two is that less than one percent of uh sofia's revenue comes from their payment network, which is actually paying for things, whereas almost 50 of a firm's revenue comes from their payment network, and this is kind of like being the payment processor see when you check out With a firm, a firm doesn't just make money on the interest rate for the loan they're, giving you they're also making money by processing the payment, and this is where a firm is really being a trojan horse to a competitor to companies like mastercard, visa discover and Amex and if you look up the market caps for those companies which we'll talk about in a little bit, you'll be blown away with the potential that a firm has to grow now uh. So you see some differences here. I do think that both of these companies have a little bit of interest rate risk.

We do think that rates will go up over the next three to four years, but then again you know we've been saying that rates would go up through. You know between like 2009 and 2019, and they barely did. But anyway, if rates go up, you'll probably have some risks built into the stock like sofi, but also with rocket mortgage and united wholesale. A firm could also be affected by interest rate risks.

One of the things to consider as well, though, which is kind of interesting, is sofi, could have a really good start to next year because maybe there'll be a refinance boom again, as we get to the end of student loan forbearance. Nobody knows, but morningstar gave a so finally, a price target of 20 and 50 cents. The company, by the way, is also guiding for, like 125 compounded annual growth for their financial services, closer to 40 to 50 percent for their entire company, so financial services would, of course be like stock trading and some of these other things so they're they're, like hey, We're planning on doubling quite frequently here on on our like stock trading options and and some of the other things, and when i say options i don't mean like options trading because they don't do options trading. I mean options for people to trade stocks.

Sorry, it was probably a little confusing but anyway. So if i also targets younger customers - and i think a firm probably come covers - and i don't know this with certainty - but probably targets - people who aren't necessarily a particular age group - but are more individuals who are just looking for that option - to finance a larger purchase Over time, so sofi has a little bit of that target where banks aren't looking right now. In my opinion, which is younger folks trying to start out their careers, get a house get a student loan, build their wealth and they're kind of pulling a lemonade where lemonade insurance is trying to attract millennials to then grow with them throughout life. So that way, if you get your student loan with sofi, hopefully you'll get your home loan and you'll refinance and you'll do all that through sofa.

That's potentially where companies like united wholesale mortgage and companies like rocket mortgage might be lagging a little bit. But i would say rocket: mortgage they've got a pretty convenient app for millennials in terms of applying for loans, so if anything, they might be competition to so far so uh. There is also a bank charger charter coming for so far they're doing this, because, even though they have savings, accounts, they're not allowed to use that those deposits for loans right now, because they don't have a banking charter. So that could be a catalyst.

It could also be a buy the room or sell the news honestly if you're thinking about trading it, but for me so far and a firm are huddles they're long, huddles they're not trades. Unless i do options in them, sometimes i'll sell puts in these and i'll take profits, but i'm not i'm not too heavily interested in trading a firm or so far, although i do expect both of them could trade down before they continue to rally we'll talk about That in a bit so so far, we have a market cap of around 12 billion dollars. Last time i checked, it was about 12.72 might be a little bit higher. Now from when i wrote this uh expecting.

Potentially, this could really draw down 10 20. In sort of a smaller correction, a firm you're, just over 30 billion dollars in market cap, it's about two and a half times larger - expect a potential here of maybe a 10 to 20 percent fall as well. Let me make sure i have updated numbers because a firm's market yeah, i'm sorry a firm's market cap, because the firm has done so well over the last couple weeks. A firm's market cap is now 39 uh billion dollars.

Excuse me and uh sofi is now sitting around 15 billion dollars giving that update, because both of these stocks have run up a little bit, but intraday both of them are falling a little bit. So it might be the start of a potential buy the dip opportunity. Would make which, in my opinion, makes for a perfect uh time to uh to release a video on them so uh anyway, we've got uh in terms of profitability, so far is expected to be profitable in 2022, a farm still kind of unknown in terms of when They're going to be profitable uh the projections out to 2024, don't really show them profitable yet but close, and i think a lot is going to come down to their partnership with amazon and so we'll see this winter, how profitable they end up being. If you really wanted to trade a firm and probably consider trying to get into a firm on a dip that happens between now and thanksgiving and then hold it through the holidays uh, hopefully you get a lot of sort of hopium over q4 sales, which would be Reported sometime between january and february, and maybe traded at that point in terms of uh sort of total average annual growth for these companies, you've got growth for both of the companies sitting around 40 to 50 in 2022, 23.

You've got larger growth at a firm expected to be somewhere around 40 and closer to 25 percent for so far, and then, once you get out to 24 25, it's kind of a crapshoot sales and marketing, what's kind of cool, is a firm spent 184 million dollars In a year on ads and so far spent 95 million dollars in a quarter so so far spends about twice as much money on advertising as uh compared to a firm and again that could be because of how a firm is attracting their customers. It's very different from how sofa is attracting their customers, which is one of the reasons i like a farm, a lot i like so far too, so don't get me wrong, they're, both great companies but uh. I do think with the firm. You could have a little bit more of that sticky renewal relationship which might be a little bit harder for for sofi, especially since there's so much competition in lending, whereas lending is competition amongst other lenders, a firm's buy now pay later is really who got the merchant Relationship, you know if, if a firm got the sweetheart deal with target walmart and amazon and other companies didn't that merchant relationship becomes the moat, i think that's one of the hardest things for people to understand when they think about a firm is building that that mode Is understanding that, and it's very easy to say ah buy now pay later, has no moat whatever? For me, it's a long huddle personally.

I hope that a firm goes back to like 115, so i can actually go shopping for it again and i'd like to see so far somewhere around 15 to 16. Again, you have kind of a good support line at so far around 1480 and it's a little too early to determine a real support line for a firm just because we've gapped up so many times. You could look at some of the recent gaps, though probably like 108. Another good target as well.

Certainly if it was under 100 it'd be great, but i think you'd have to. You have really have to see some broader market pain to see both the firm and uh, and so, if i go down to these levels, so maybe if you got a 10 to 15 draw down by the dip average in a little bit so uh, just comparing Some of the market caps remember a firm was around that 39 billion 15 billion for sofi. These are baby companies compared to some of the massive ones which of course, do way more revenue and a profitable way more volume right, but amex 136 billion market cap visa 480 billion mastercard 348. That's crazy! Right, like those are some huge numbers and look.

There has not been a new payment processor outside of amex visa. Mastercard discover - and this is a little known one - but jp morgan's payment processing, which is uh. They actually do payment processing. They do it under the visa umbrella, but they do their own payment processing.

So you have these five massive payment processors again amex visa, mastercard, discover and then jp morgan under the visa umbrella. You really have not had a new payment processor like ever. These companies have been kind of like the oligopoly of payment processing. Now you do have crypto as a potential payment processor, but in the meantime, in traditional finance, a firm's buy now pay later being a payment processor, really cool trojan horse to really make a firm, a competitive payment processor, and i think that's where uh you know you Could really see some stretchiness at a firm, especially compared to upstart, which is a lending platform that has just gone to the moon.

Now upstart is profitable worth noting, so you have some more risk at a firm because they're not yet profitable, but upstart has just been absolutely destroying it kicking butt and is a profitable company. Now they are selling at like 180 times forward 2023 uh earnings, which is like an insane number. So they've gotten really really stretchy but hey. You know what people are looking for.

Deals in the market right now, love the fintech space. These are companies, i'm all paying attention to looking for opportunities to add to them, and hopefully you found this helpful if you found this kind of video educational consider checking out the programs on building your wealth, i think you'll love them. You get lifetime access to them. Most people join and they're like wow this paid for itself within, like two weeks to four weeks.

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