The ASX Fintech shares have been in the spotlight lately due to the recent growth the industry has experienced. This growth has, therefore, resulted in share prices rising.

‘Fintech’ is short for financial technology and is thought by many to be the future of finance. This comes as people’s lives are becoming increasingly more digital. But one thing is for sure, and that is fintech shares have made a lot of people huge returns, especially in recent months. People have largely moved towards online alternatives as a result of the coronavirus.

When analysing fintech companies, we can usually base our findings on customer numbers and revenue. If the company has a substantial number of both, it can become of value to a major company as a takeover target or, it can convert these figures into profits and later pay dividends.

While fintech solutions have become popular with consumers, it’s possible they are still in their early stages and have a lot of market penetration left to cover. Although the companies below have reached a substantial number of customers, their volumes are small when considering the number of consumers within their operating markets. This leaves room for huge growth.

The below ASX fintech shares have been stellar performers and show strong potential for further growth:

Afterpay Ltd (ASX: APT) 

Afterpay is likely Australia’s most famous and successful fintech solutions provider. The ASX fintech provides a platform that allows online shoppers to ‘buy now’ and ‘pay later’. Since June last year, the Afterpay share price has returned 182%. This is the kind of annual return that even Warren Buffet would rarely get from a single investment.

Afterpay’s success has come following its growth in Australia and especially in the US. In May, Afterpay was used by more than 8.4 million active customers internationally with 5 million active customers in the giant US market. The company is now offered by more than 15,000 brands and retailers. In Q3 FY20, Afterpay processed $2.4 billion in transactions, a massive 354% increase from Q3 Fy19.

Additionally, the Afterpay share price has been boosted by buying from China’s Tencent Holdings Ltd. In April, Tencent bought shares on market and built a 5% holding in Afterpay.

Zip Co Ltd (ASX: Z1P)

Zip Co listed on the ASX in 2015 and has seen considerable success since that time. Since its IPO price of $0.20 cents, Zip Co’s share price has increased by 3075%. This means that every dollar invested in Zip Co 5 years ago is worth over $30 today.

Zip Co is accepted by more than 18,000 retailers in Australia and offers 2 products; Zip Pay and Zip Money. Both of these products allow purchasers to buy now and pay later online and in-store with participating retailers. 

In May, Zip Co’s monthly revenue was $15.6 million. This was a huge 78% increase year on year from May 2019. Zip Co has 2.1 million customers in Australia and New Zealand and it processed $189.3 million in transactions in May. Further, customers repayment rates were higher or on par with pre coronavirus levels.   

Zip Co recently entered the US through its acquisition of QuadPay. The company estimates the US retail market to be worth over US$5 trillion per year. At the end of March, QuadPay had more than 1.5 million customers and there were 3,500 merchants accepting payment through its platform. Given that rival Afterpay has seen such significant success in the US, there appears to be huge potential for Zip Co to grow in the US market. 

Sezzle Inc (ASX: SZL)

Sezzle is another buy now pay later platform for online shoppers. It is headquartered in the US and has exposure to the giant US retail market. Since April, the Sezzle share price has increased by 859%. This is a huge return over a 3 month period and reflects the recent success of the group as more people have moved towards online shopping. 

Sezzle has 1.3 million customers and its platform is offered by almost 15,000 merchants. Sezzle is developing innovative products, including online payment cards to attract lucrative Gen Z and millennial generations. It estimates that the Gen Z US consumer population will reach 84 million in 2020 and that the US millennial consumer population will reach 69 million in 2020. Additionally, it estimates that a huge 25% of spending power will belong to Gen Z this year. Further, Sezzle has estimated that 67% of Millenials have a sub or non-prime credit score. This may make Sezzle a great choice for them and provide a sustainable alternative to credit cards.

According to Sezzle, 53.7% of its consumers are millenials. 

This ASX fintech share has experienced triple-digit revenue growth year on year since 2018 and, as reported, continued this trend in the first quarter of 2020. In April, Sezzle achieved underlying merchant sales of US$119.4 million, a record for the company.

More reading

• Splitit’s share price surges higher. Up 135% in two days
• Brokers name 3 ASX 200 shares to buy today
• ASX tech shares: 2 exciting small caps to watch closely
• Why a2 Milk, Afterpay, and Pushpay shares just hit record highs
• ASX 200 falls 0.9%, Afterpay share price hits new record

Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Grow your wealth with these 3 ASX fintech shares appeared first on Motley Fool Australia.

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The share price of buy now, pay later (BNPL) provider Splitit Ltd (ASX: SPT) is up by a massive 27% so far in trading today. This follows on from a whopping 108.3% share price rise yesterday.

The BNPL market has really being heating up over the past year, with rivals Afterpay Ltd (ASX: APT) and Openpay Group Ltd (ASX: OPY) all vying for a piece of this rapidly expanding market.

New deal with Mastercard

So, what has been behind this rapid increase in the Splitit share price over the past two days? It all appears linked to the company’s deal with Mastercard announced yesterday.

The new agreement will enable Splitit to work in partnership with Mastercard by integrating its instalment solution with Mastercard’s own technology platform. The deal is likely to further assist Splitit in its quest to globally rollout its offering.

The new solution with Mastercard will provide connected merchants the ability to deliver customers a seamless and secure customer checkout experience, whether in store or via online channels.

So how does the Splitit instalment solution work?

Splitit is cleverly carving out a very interesting niche in the BNPL market. Splitit does not extend credit to customers like its main and much larger rival Afterpay. Instead, Splitit’s payment solution enables customers to pay with their existing debit or credit card. It does this by splitting the cost into monthly payments. Also, since the purchase is made with an existing card, approval of the transaction is immediate.

Previous deal with Visa

The deal announced with Mastercard yesterday, follows on from another agreement announced with Mastercard‘s rival Visa, back in March.

Through this deal, Splitit is able to leverage the Visa Developer Platform to further expand into the instalment payments market. Splitit now offers Visa Instalment Solutions to its merchant network.

A rocky ride for the Splitit share price

The Splitit share price has been quite volatile over the past 12 months. Although it has shot up significantly over the last two trading days, prior to this it was failing to even reach its early 2019 levels. The Splitit share price grew very strongly in early 2019, shooting over $1.50 at that time, but since lost ground up until two days ago. It fell as low as 24 cents per share in March this year.

At the time of writing, the Splitit share price is trading at $1.75. Time will tell whether or not it can maintain share price momentum this time around.

More reading

• Grow your wealth with these 3 ASX fintech shares
• Brokers name 3 ASX 200 shares to buy today
• ASX tech shares: 2 exciting small caps to watch closely
• Why Adairs, Nick Scali, SEEK, & Splitit shares are storming higher
• Why a2 Milk, Afterpay, and Pushpay shares just hit record highs

Motley Fool contributor Phil Harpur owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Splitit’s share price surges higher. Up 135% in two days appeared first on Motley Fool Australia.

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The Nick Scali Limited (ASX: NCK) share price leapt 21% this morning following stronger than expected sales. Despite the closure of stores during lockdown, sales orders have grown 7% over the second half to date and 20.4% over the quarter to date.

As a result of continued strong sales despite the coronavirus pandemic, the Nick Scali share price has more than doubled from its March low of $3.08 and is now trading at $7. 

What does Nick Scali do? 

Nick Scali is a furniture retailer which has been trading in Australia for over 50 years. Expanding into New Zealand in 2017, Nick Scali imports over 5,000 containers of furniture per year. Prior to the pandemic, the company sold predominantly through physical stores, but has launched an enhanced digital offering as a result of the lockdown. 

What did Nick Scali report?

Nick Scali forecast strong profit growth in the second half, with net profit after tax (NPAT) expected to be up 15% to 20% on 2H FY19. Full year revenue is expected to be in the range of $260 million to $263 million. The retailer is expecting full year underlying NPAT of $39 million to $40 million. 

The retailer closed showrooms on 30 March 2020, and began reopening in April, with all stores open by the end of the month. Since reopening, all showrooms have traded strongly with positive sales order growth. Nick Scali responded to store closures by improving its digital offering, allowing customers to purchase its entire range of products online. 

What is the outlook for Nick Scali?

Nick Scali experienced a significant decline in sales orders during the period of store closures. This means that around $9 million to $11 million of sales were unable to be recorded in the current half of the financial year. Nonetheless, profits are set to increase in 2H FY20 compared to 2H FY19. This is thanks to a range of cost reduction initiatives across marketing, employment, and property, alongside government assistance. 

The company saw a significant rebound in customer activity in May and the first half of June. Sales orders over May and June are expected to be up 54% on the prior corresponding period. This surge has been driven by the easing of government restrictions and a reallocation of consumer spending toward furnishings and homewares. 

Nick Scali has benefitted from people spending more time at home. As a result, many consumers are choosing to upgrade their domestic environments with new furniture and accessories. Given the current increase in sales orders, Nick Scali expects sales growth of 30% in Q1 FY21, which will underwrite profit growth for 1H FY21. 

More reading

• Why Adairs, Nick Scali, SEEK, & Splitit shares are storming higher
• Westpac tips the Australian dollar to continue rising

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX stock of the day: Nick Scali share price leaps 21% on sales numbers appeared first on Motley Fool Australia.

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