Public Markets Are Not Buying the Payment Disruption Story
Snapshot of prices dated Jan 8.
New cut off at $1bn market cap (as $2bn is hurdle to escape small cap hell). This edits out some interesting companies such as Ondeck at $645m (which maybe acquisition bait like othet sub $1bn Fintech companies such as Yodlee and XOOM).
Categorization is always debatable. I started with these – Payments, Wealth Management, Software Vendor (aka Traditional Fintech) and lending Market (with Lending Club in splendid isolation after Ondeck failed to make the cut). I left Fair Isaac (FICO score) uncategorized.
Here is Index ranked by Market Cap:
| SYMBOL | NAME | Category | MKT CAP |
| V | Visa Inc. | Payments | 180.22 |
| MA | MasterCard Incorporated | Payments | 104.05 |
| AXP | American Express Company | Payments | 63.07 |
| PYPL | PayPal Holdings, Inc. | Payments | 40.8258 |
| SCHW | The Charles Schwab Corporation | Wealth Mgt | 38.94 |
| FISV | Fiserv, Inc. | Software | 20.17 |
| AMTD | TD Ameritrade Holding Corporation | Wealth Mgt | 16.93 |
| IBKR | Interactive Brokers Group, Inc. | Wealth Mgt | 15.22 |
| ETFC | E*TRADE Financial Corporation | Wealth Mgt | 7.96 |
| MSCI | MSCI Inc. | Wealth Mgt | 7.15 |
| FDS | FactSet Research Systems Inc. | Wealth Mgt | 6.3 |
| SSNC | SS&C Technologies Holdings, Inc. | Software | 6.28 |
| JKHY | Jack Henry & Associates Inc. | Software | 6.15 |
| MRKT | Markit Ltd. | Wealth Mgt | 5.14 |
| SQ | Square, Inc. | Payments | 3.653 |
| LC | LendingClub Corporation | Lending Market | 3.6501 |
| DH.TO | DH Corporation | Software | 3.44 |
| FICO | Fair Isaac Corporation | 2.84 | |
| ACIW | ACI Worldwide, Inc. | Payments | 2.31 |
| WPG | WP GLIMCHER Inc. | Payments | 1.969 |
| WETF | WisdomTree Investments, Inc. | Wealth Mgt | 1.93 |
We can see that Payments dominate and the new entrants such as Square are still tiny. PayPal is still the only market cap challenger to the established credit card incumbents.
Sorting by Price Sales Ratio shows the same bias to size:
| SYMBOL | NAME | Category | PSR |
| V | Visa Inc. | Payments | 12.92 |
| MA | MasterCard Incorporated | Payments | 10.73 |
| LC | LendingClub Corporation | Lending Mkt | 9.91 |
| WETF | WisdomTree Investments, Inc. | Wealth Mgt | 6.97 |
| MSCI | MSCI Inc. | Wealth Mgt | 6.77 |
| SSNC | SS&C Technologies Holdings | Software | 6.73 |
| SCHW | Charles Schwab | Wealth Mgt | 6.2 |
| FDS | FactSet Research Systems Inc. | Wealth Mgt | 6.1 |
| AMTD | TD Ameritrade | Wealth Mgt | 5.2 |
| JKHY | Jack Henry & Associates Inc. | Software | 4.81 |
| MRKT | Markit Ltd. | Wealth Mgt | 4.75 |
| PYPL | PayPal Holdings, Inc. | Payments | 4.56 |
| ETFC | E*TRADE Financial Corporation | Wealth Mgt | 4.29 |
| FISV | Fiserv, Inc. | Software | 3.88 |
| FICO | Fair Isaac Corporation | 3.39 | |
| DH.TO | DH Corporation | Software | 2.47 |
| WPG | WP GLIMCHER Inc. | Payments | 2.3 |
| ACIW | ACI Worldwide, Inc. | Payments | 2.26 |
| AXP | American Express Company | Payments | 1.99 |
| IBKR | Interactive Brokers Group, Inc. | Wealth Mgt | 1.71 |
| SQ | Square, Inc. | Payments | 1.53 |
The market is clearly signaling that they do not see the Visa and Mastercard incumbents being disrupted any time soon with both getting a PSR over 10. Square is a lowly 1.5.
Wisdom Tree is highly rated –the ETF data powering Robo Advisers.
Traditional Fintech software providers are still highly rated; although they are no longer an exciting disruptive story those great gross margins in software clearly still entice investors.
