After a rough 2022, smart investors know when to make the most of an opportunity. Look no further than beaten-down fintech companies, for example. At the moment, there’s a growing need for contactless payment solutions. Plus, there’s rising demand for “Buy Now Pay Later” services. Leading BNPL provider Affirm Holdings (NASDAQ:AFRM), for example, is in focus right now.  SoFi Technologies (NASDAQ:SOFI) might have taken a beating last year but could change the traditional banking industry. Plus, Upstart (NASDAQ:UPST) is already using AI to enhance its lending platform. 

SoFi Technologies (SOFI)

SoFi Technologies is taking aim at modern banking and is attempting to change the traditional ways of consumer banking. It targets the new generation of digital banking users, with many calling it the bank of the future. However, SOFI stock has dropped more than 50% over the past year and is trading at a low of $5.87. Granted, the stock took a hit on the student loan moratorium, but that’s temporary.

The SoFi app offers a one-stop solution for users. You can invest, get a credit card, manage your bank account, handle  money through a budgeting tool and read educational articles and learn about finance. Although the company has missed the EPS target in the last two earnings season, my colleague at InvestorPlace Luke Lango thinks SoFi stock can provide 24X gains in 10 years. However, do not expect the stock to bounce back over night. It will take time for all fintech stocks to gain strength due to the current economic situation. SoFi is set to report Q4 earnings on Jan. 30. 

Upstart (UPST)

Upstart is known for transforming the lending industry with the use of artificial intelligence. It has a solid approach to assessing creditworthiness and uses AI to analyze the profile of an applicant. This ensures an accurate and quick decision, making borrowing easier for consumers. However, rising interest rates haven’t gone down well with the company and it has not been able to approve as many applications. This has certainly affected the business. But it has products and services that are unique and highly successful.

At the moment, the UPST stock is down more than 80% over the year and is trading at $17. This is your time to jump in if you believe in the products and services of the company. Upstart is a lender and when the economic situation is difficult, borrowing will rise. This is where the company can win. The stock is still one of the top fintech stocks to add to your portfolio today. 

Affirm (AFRM)

With rising inflation, Buy Now, Pay Later gained massive popularity, and Affirm made the most of this opportunity. It became one of the leaders in the BNPL economy and partnered with Amazon (NASDAQ:AMZN) in 2021 which boosted the business. It also has a partnership with Walmart (NYSE:WMT). 

AFRM stock is down 75% over the year and is trading at $14.30 today. However, it is up 55% in the past month. If Amazon and Walmart continue to stay with Affirm and BNPL activity picks up, the stock could rebound sooner than expected. The company is also burning cash heavily which might lead to a lower gross margin this year. There are a lot of ‘ifs’ associated with Affirm at this stage. The company reports earnings on Feb 8. 

Pick: Out of the three top fintech stocks discussed here, Upstart has the strongest potential to rebound. The company could make the most of the current economic situation and increase its lending, which will benefit the business. The stock is trading at a discount today and could generate strong returns in the long term. It has a fundamentally strong business that can grow significantly with time.