MW Fintech stocks are hot again, as Coinbase and eToro whet investor appetite

By Steve Gelsi

Crypto broker Coinbase is slated to join the S&P 500 on Monday as the sector gains favor while trading platform eToro's IPO hits pay dirt and Chime files to go public

Shares of financial technology companies, which were hit hard in 2022 as rising interest rates spooked investors, leading to avoidance of riskier assets, are getting hot again.

With the S&P 500 SPX now in positive territory for the year after a revival of the so-called Magnificent Seven stocks, and with a softening in tariff rhetoric lowering the perceived recession risk, Wall Street's appetite for financial technology, or fintech, companies has increased.

Another tailwind for fintech comes from the Trump administration's work to promote digital currencies - a move that will likely provide further opportunities for companies in this emerging asset class.

The companies that survived the bust of 2022, when fintech bellwether Klarna's private-market valuation plunged to $6.7 billion from nearly $46 billion a year before, are now looking good to investors.

Coinbase $(COIN)$ is set to join the S&P 500 on Monday - another plus for the sector.

While shares lost 7% of their value on Thursday after Coinbase revealed that a security breach caused by overseas contractors bribed into stealing account information would cost it up to $400 million, the stock is still on an overall upswing. It stock rose 2% on Friday.

Coinbase's stock fell to $36 three years ago, and has since climbed all the way to $244 a share, with a formidable market capitalization of $62 billion.

Coinbase's inclusion in the benchmark S&P index, the first for a cryptocurrency broker, is creating a halo effect for across fintech, where stocks such as Robinhood (HOOD), SoFi $(SOFI)$, Block $(XYZ)$ and Affirm Holdings $(AFRM)$, as well as some larger private companies waiting to go public such as Klarna and Chime, are among the notables.

"Fintech is back," eToro Chief Executive Yoni Assia told MarketWatch after taking his stock- and crypto-trading company public on Wednesday for a healthy gain of about 30% and IPO proceeds of more than $600 million.

The IPO marks from eToro $(ETOR)$ marked the first from a major fintech company since 2021, he said.

Also read: Newly issued eToro shares jump in Nasdaq debut. It's a bullish sign for IPOs.

The company saw an opportunity to float its IPO as the market snapped back from steep losses following President Donald Trump's jarring "liberation day" tariff announcement on April 2, he said.

The tariff swoon had put eToro's IPO on the back burner, but in the end the company managed to meet its prior goal and go public before June 30, he said.

"The markets have turned successfully post-tariff to where they are today, which led us to a very successful IPO in a good market," Assia said.

Along with the pluses of apparent Trump support and more mature balance sheets, fintech companies stand to benefit greatly if the economy avoids a recession, since that means consumers will continue to use their services to borrow, spend and move money around.

Economists at J.P. Morgan cut their closely watched recession-risk estimate this week to 40% from from 60% after Trump's reversal on China tariffs touched off a 1,000-point rally in the Dow Jones Industrial Average DJIA.

Further signs of fintech's growing popularity on Wall Street came this week from Chime Financial Inc., a San Francisco-based provider of savings and checking accounts that filed for an IPO with plans to trade on the Nasdaq under the ticker symbol "CHYM."

Also waiting in the wings is buy-now-pay-later company Klarna, which filed to go public late last year but has yet to issue an estimated price range for the deal.

Greg Martin, founder of Rainmaker Securities, a broker and banker for private-market company stock, said both Chime and Klarna will likely see market values of $15 billion to $20 billion when they go public.

Fintech companies will continue to challenge traditional banks, and have plenty of growth ahead based on their younger customer bases and relatively low market penetration for their services, he said.

"After eToro, a flow of fintech companies will be coming to market," Martin said.

Along with Chime and Klarna, Martin said, other potential IPOs could come soon from other larger fintech companies such as stablecoin specialist Circle and money-transfer software company Revolut.

To be sure, an economic slowdown remains a business risk for a sector in which revenue relies more heavily on transaction revenue than banks, he said.

Although it's been reduced for now, the possibility of a recession continues to loom in a year that's already withstood surprise market swoons amid tariffs and trade-war uncertainty, along with a January drop driven by jitters surrounding competition for the likes of AI darling Nvidia $(NVDA)$ from China's upstart DeepSeek.

"Even with a forecast of no recession but weak growth, we still see the risks skewed to the downside given the damage already done to confidence and the risks that the trade war and other U.S. policies (fiscal, immigration, regulatory) are not as friendly as hoped for," JPMorgan's economists said.

Despite a cautious outlook in the market, Steven Schoenfeld, chief executive of MarketVector Indexes, said eToro's IPO showed a strong appetite for deals from fintech names that have withstood the downturn in 2022 and 2023 and emerged stronger.

"Some of the lower-quality companies went away, and now the bar for an IPO is higher," said Schoenfeld. "It's a good thing for investors. Everyone is relieved about the market rally, but no one is taking it for granted."

-Steve Gelsi

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May 16, 2025 10:16 ET (14:16 GMT)

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