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.