Many fintech stocks fizzled out over the past year amid macro uncertainties that drove investors away from the high-growth sector. But over the long term, the fintech sector should continue to flourish as more consumers shift all of their banking services online.
Two companies that will profit from that secular expansion are Affirm (AFRM 7.62%) and Chime (CHYM 4.80%). Let's see what these two fintech companies do, and why they might turn a modest $500 investment into thousands of dollars over the next few years.
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Affirm's BNPL business is booming
Affirm provides buy now, pay later (BNPL) services to younger and lower-income consumers who don't use credit cards. It splits these "microloans" into four or more recurring payments, and it doesn't charge any compound interest or hidden fees. Affirm is also an appealing platform for merchants, since its fees are generally lower than credit card swipe fees.
NASDAQ: AFRM
Key Data Points
Affirm ended its latest quarter with 25.8 million active consumers, who made an average of 6.4 transactions each, and 478,000 active merchants. That's up from 21 million active consumers, 5.3 average transactions, and 337,000 active merchants a year earlier.
From fiscal 2025 (which ended last June) to fiscal 2028, analysts expect its revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at CAGRs of 26% and 132%, respectively, as the BNPL market expands. Yet with an enterprise value of $18 billion, it still looks like a bargain at 16 times this year's adjusted EBITDA.
Chime is challenging conventional banks
Chime's platform provides fee-free checking and savings accounts with overdraft protection, early pay features, and other financial services. It also issues a Visa (V 0.80%) debit card with fee-free access to more than 50,000 ATMs, as well as an entry-level Visa credit card. Those features make it popular among lower-income users who lack the adequate assets to open fee-free accounts at traditional banks. Its early pay tools are useful for people who live paycheck to paycheck, and its low-limit credit cards are useful for gradually building credit.
NASDAQ: CHYM
Key Data Points
Chime isn't actually a bank. Instead, two FDIC-insured banks -- The Bancorp (TBBK +1.10%) Bank and Stride Bank -- actually hold and manage all of its accounts. It generates most of its revenue by taking a cut of swipe fees from its debit and credit cards. It also earns incentives from The Bancorp and Stride for tethering its customers to their banks. It served 9.5 million active members at the end of 2025, representing 19% year-over-year growth.
From 2025 to 2028, analysts expect Chime's revenue and adjusted EBITDA to grow at CAGRs of 19% and 92%, respectively, as it gains more lower-income members. With an enterprise value of $7.6 billion, it still looks surprisingly cheap at 19 times this year's adjusted EBITDA.
