Financial services companies are an essential sector for investors to seek exposure because they offer decent dividend yields and relatively stable returns. Despite this fact, this has led to this list of financial stocks to sell.
Fintech companies are also a make-or-break option for investors, and the overall volatility within the ever-expanding fintech space may continue to lead investors elsewhere or bring investors in based on the desired risk profile.
Investors looking for financial companies to invest in should steer clear of the stocks listed below because they are all options that have seen somewhat lackluster news and or earnings results recently that have tanked that share price and caused investors to continue to flee these companies.
Upstart Holdings (UPST)
Upstart Holdings (NASDAQ:UPST) provides consumer loan services and enables customers to link to banks and credit unions via its platform.
Over the past six months, Upstart has seen its share price fall by over 50%, initiated by its disappointing second-quarter results and a poor financial outlook for the remainder of the year.
On Nov. 7, Upstart released its earnings for the third quarter of 2023, which continued to spark investors’ fears regarding its overall financial strength. Total revenue fell by 14%, and transaction volume dropped by 34% compared to the previous year. And it provided guidance for the fourth quarter that could be more worrying for investors. This makes it one of those financial stocks to sell.
Upstart is a company that operates an AI-driven lending platform. 2023 saw significant gains, mainly due to the hype around the artificial intelligence industry that affected Upstart as well as many other companies. But, after the initial attention, investors began to see the warning signs: diminished returns and mediocre guidance.
Upstart has experienced multiple double-digit drops in its share price this last year following its Q2 and Q3 earnings, which left a considerable amount to be desired. With aspects such as a net loss in cash flow from operating activities nearly tripling compared to the previous year and its increased borrowing activity in the third quarter, Investors will pay close attention to its fourth-quarter earnings, which are expected to be released on Feb. 13.
Green Dot (GDOT)
Green Dot (NYSE:GDOT) is a fintech company that offers deposit accounts for small businesses and consumers as well as transaction services.
Over the last six months, Green Dot has experienced a drop in overall share price of nearly 50%, primarily due to an overall decrease in its customer base in multiple business segments and a decrease in earnings guidance for its fourth quarter and full-year earnings results.
On Nov. 9, Green Dot reported earnings for the third quarter, which stated that overall operating revenue slightly increased compared to the previous year. GDOT also experienced a net loss of $6 million for Q3 2023; in Q3 2022, it was net income of $5 million. All in all, it’s one of those financial stocks to sell.
Green Dot lost over 30% in its share price directly following the recent earnings results in which it reported a drop in its customer base in all its segments, including consumer service, B2B, and money processing, represented by an overall decrease of 15% when compared to the third quarter of 2022. And with an expected drop in overall earnings for the fourth quarter and full-year results. Green Dot is a fintech company that may be best for investors to avoid now.
Coinbase Global (COIN)
Coinbase Global (NASDAQ:COIN) operates a financial platform and infrastructure for cryptocurrency transactions.
Year-to-date, Coinbase’s share price has dropped by nearly 30%, primarily due to the speculation surrounding and eventual approval by the SEC of spot Bitcoin ETFs.
Over the past year, Bitcoin (BTC:USD) has grown by over 80% in the last year, and stocks such as Coinbase have benefited from increased interest in cryptocurrency. With the approval by the SEC of 11 different spot Bitcoin ETFs on Jan. 11. The interest in more stable investment vehicles within the cryptocurrency space is very appealing to new investors.
Notably, the overall price of Bitcoin since this SEC approval of multiple spot Bitcoin ETFs has remained relatively stagnant, and the share price of Coinbase has continued to fall.
Coinbase has seen positive earning results recently in its third-quarter earnings report, which was released on Nov. 2. It stated that total revenue increased by 14% compared to the prior year and that there was a large reduction in its operating losses, which helped to propel the company’s share price higher until the speculation surrounding the approval of spot Bitcoin ETFs started to take place.
Coininbase is a mixed bag because it has shown solid financial results that excite investors. On the other hand, they are experiencing a time of uncertainty surrounding the massive impact the SEC approval has had on the cryptocurrency market. For the time being, it may be best to avoid Coinbase due to the instability of its share price, which may or may not continue to fall.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.