Even though the fintech market is expected to boom over the long run due to the rapid adoption of advanced technological solutions in the financial sector, data privacy concerns continue to worry consumers. Against this backdrop, we think it could be wise to avoid fintech stocks FactSet Research (FDS) and Lemonade (LMND). They look overvalued at the current price levels, and Wall Street analysts expect them to decline significantly in the near term. Read on.The Fintech industry has immense growth potential over the long term due to the increasing adoption of advanced technologies for digital transactions. According to The Express Wire report, the Fintech market is expected to grow at an 8.6% CAGR over the next three years.
However, concerns related to data security have been dampening the industry’s growth. With increasing cyberattacks, consumers are wary of using fintech solutions, especially since they typically involve confidential information. Investors’ pessimism toward fintech stocks is evident in Global X FinTech ETF’s (FINX) 2.5% loss over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 3.9% returns.
So, even though the long-term prospects for the fintech industry look promising, some fundamentally weak companies that are trading at lofty valuations could witness a price pullback in the near term. Wall Street analysts expect FactSet Research Systems Inc. (FDS) and Lemonade, Inc. (LMND) to continue declining in the near term. So, these two stocks are best avoided now.
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