Square-Afterpay Deal Puts Fintech Stocks Back In Focus

Square-Afterpay Deal Puts Fintech Stocks Back In Focus

Sign with logo at the headquarters of mobile payment company Square in the South of Market (SoMa) ... [+] neighborhood of San Francisco, California, October 13, 2017. SoMa is known for having one of the highest concentrations of technology companies and startups of any region worldwide. (Photo by Smith Collection/Gado/Getty Images) Our Fintech Stocks Theme - which includes digital payments and lending players, card networks, and insurance technology players - remains down by about 1% year-to-date, compared to the broader S&P 500 which has gained 17% year-to-date. The underperformance comes as investors rotate out of technology and high-growth names into cyclical stocks to play the reopening following the Covid-19 lockdowns. However, the theme should come back into the spotlight following fintech major Square's recent announcement that it would buy Afterpay, an Australian buy now, pay later company in a $29 billion, all-stock transaction. The deal is significant for Square SQ (and for the broader fintech space), as it brings together Square's popular consumer applications and merchant solutions with a financing component, as it looks to take on banks and credit card companies for a larger share of the payments market. The deal also comes at a time when younger customers