Here’s a stat that should stop every value investor in their tracks: the Global X FinTech ETF (FINX) has dropped 48% over the past five years. In the same period, the S&P 500 has risen 80% and the financial sector has climbed 59%. Fintech went from being the most overhyped corner of the market to one of the most overlooked. And that’s exactly when the smart money starts sniffing around.
Two names sit at the center of this setup: PayPal and Block (formerly Square, now trading as XYZ after a ticker change). Both are trading at price-to-earnings ratios well below their three-year averages. But the analyst community isn’t split evenly between them — Block is getting the heavier love, and it earned it. The company jumped 20% recently after announcing layoffs and strong 2026 guidance, the kind of brutal-but-effective discipline that Wall Street rewards.
Block’s real edge is what some analysts are calling its “closed-loop” potential. Cash App competes with PayPal’s Venmo and Apple Pay in consumer payments, but Block also owns Afterpay (buy-now-pay-later) and Square (merchant processing). The play is to funnel Cash App users to Square merchants via Afterpay, cutting out expensive third-party payment networks entirely. If it works, Block captures both sides of the transaction — a moat that PayPal simply doesn’t have.
PayPal’s story is messier but potentially explosive. Shares surged 10% on M&A rumors, with speculation about strategic interest from larger players. The stock trades around $52 against an analyst price target of $61 — roughly 17% upside. But there are headwinds: mounting legal pressure from shareholder investigations over its 2026 outlook transparency, and the lingering question of whether the 10% pop was a legitimate rerating or a dead-cat bounce.
Seeking Alpha data shows only three fintech stocks currently hold A-rated momentum grades: Sezzle, StoneCo, and NCR. That’s a remarkably thin list for an entire sector, which tells you two things. First, most of fintech is still in the penalty box. Second, the few names showing momentum are separating from the pack in a meaningful way. The sector is consolidating around winners, and the losers are getting left behind.
The broader context matters here. Fintech’s five-year collapse coincided with rising interest rates, which crushed the unprofitable growth stocks that defined the sector. But rates are heading lower, digital payments continue growing at double digits globally, and the survivors have spent two years cutting costs and proving they can generate real earnings. The setup is starting to look like energy stocks did in late 2020 — hated, cheap, and quietly improving.
The risk? Timing. Cheap can always get cheaper, and the Iran crisis could trigger a broad market pullback that drags fintech down regardless of fundamentals. But for investors with a 12-to-18-month horizon, the valuation reset in fintech is hard to ignore. When an entire sector falls 48% while the market doubles, either fintech is permanently broken — or the market is handing you a discount. The analysts are betting on the discount.