The S&P 500 is in a bear market, with a noteworthy decline of more than 20%. Such declines might be frightening, but they do offer long-term investors with some great opportunities to acquire shares at fractions of their former price. Since 1950, the S&P 500 has gone through 11 bear markets on average, which have lasted around one year. While no one really knows how long any given bear market will last, so far they’ve all come to an end, and new bull markets have begun.
While the sell-off may continue, now is a good time to chomp on some beaten-down fintech companies. Here are two you can buy now at a discount.
LendingClub offers personal loans to customers who want to combine their high-interest credit card obligations and other debts into a single lower-rate loan. The firm was created in 2006 as a peer-to-peer lending platform, and it has 15 years of data that it puts into its AI algorithms to help it make better loan decisions.
LendingClub acquired Radius Bancorp in Feb. 2021, enabling the firm to start keeping loans on its books. Under this new approach, LendingClub does not need to rely solely on loaning money to generate revenue.
The company is already seeing results. In the first quarter, it earned $100 million in net interest income, up 440% from the same period last year and 20% from Q4. During its first-quarter investor conference call, management predicted that second-quarter revenue would rise by between 44% and 49%, as well as net income growth by between 327 percent and 380%.
LendingClub’s business transformation has resulted in significant growth during the last year. Investors, on the other hand, may be in a wait-and-see mode to determine if this development can continue; because the stock closed at a one-year forward price-to-earnings ratio of just under 8 on Tuesday.
2. Tradeweb Markets
Tradeweb Markets is a platform that allows big players on the market, like central banks and hedge funds, to exchange various assets.
Tradeweb was founded in 1996 and began offering services to help bring U.S. Treasury trades into the present age. Tradeweb’s platform has been gaining more clients over the years, and its market share of the United States’ Treasuries industry has risen from 7.5% to 19.6%. The company’s share of corporate equities, credit markets, and money markets has grown significantly over the past few years, despite a decrease in total market volume growth since 2015 .
A higher level of volatility will benefit the firm because it promotes increased trading volume. This was true in Q1, when Tradeweb’s entire trading volume rose to a new high, with revenue increasing by 14% and net income by 22%.
Tradeweb is somewhat risk-averse to extreme volatility across assets. Tradweb is hesitant to accept levels of volatility that become so high that consumers may negotiate transactions directly with one another, bypassing its platform entirely. That said, if the economy worsened, customers might renegotiate Tradeweb’s fees, putting pressure on its profit margins.
Tradeweb’s stock has tumbled 31% thus far, but it appears to be another no-brainer given its increasing market share.