Fintech Analysis: Robinhood and Block Shine While PayPal Struggles, KeyBanc Analyst

KeyBanc analyst Alex Markgraff’s consumer fintech survey addresses key topics and debates surrounding some of the most relevant sector debates, including digital wallet share, tax preparation and filing tendencies, direct deposit and card adoption, BNPL trends, and more.

After years of scaling users, the analyst noted the consumer fintech category has firmly entered an era of monetization and primacy. 

While not an entirely novel concept, perhaps another way to convey “profitable growth,” Markgraff observed, is a renewed focus on long-term, highly engaging customer relationships and a product roadmap to support this focus. 

He said a battle for category leadership and primary customer relationships is underway; utility is paramount to long-term success. The net effect of these efforts and maturing consumer preference will likely reveal category consolidation—not necessarily via notable M&A. 

The analyst’s survey results have shown an expansion in FinApp utilization, as measured by the number of apps used. However, respondents indicate a desire to use fewer apps in the future. Not surprisingly, younger respondents indicate greater and deeper adoption of FinApps, while income proves less of a factor.

Subsequently, the analyst had a positive take on Robinhood Markets, Inc HOOD, Intuit Inc INTU, and Block, Inc SQ. He had a negative take on PayPal Holdings, Inc PYPL.

In the case of Intuit, the analyst had a positive take on TurboTax indicators around DIY dominance and share gain in 2024, the opportunity to address assisted category with full-service “at-bats” considering the proportion of filers likely to establish new tax pro relationships and high consideration for full-service offering, and Credit Karma opportunity in an improving credit supply environment as the survey indicates consistent demand.

The analyst boosted his price target to $700 on increased confidence in Turbo Tax’s full-service strategy and DIY share position. 

For Block, the analyst is optimistic on top tier adoption among peers, direct deposit consideration with ~67% of non-users open to depositing some portion of paycheck into CashApp, Cash Card prevalence, and primacy ranking with ~40% of users indicating 40%+ of monthly spend on Cash Card and Afterpay utilization, recognized as the most frequently used provider in the trailing six months. 

In the case of Robinhood Markets, the analyst is optimistic about the Robinhood retirement offering, with 37% of respondents considering or planning to open futures opportunities, which showed ~61% of users interested in trading futures and interest in and willing to pay for Robinhood advisory services. 

For PayPal, the analyst is negative on wallet share. Despite PayPal’s leadership in adoption among survey respondents and prevalence in the checkout, survey data illuminates competition from other APMs/ digital wallets that the analyst noted as detrimental to sentiment and potentially adding pressure to fundamentals.

Price Action: HOOD shares closed higher by 0.84% at $10.79 on Friday.

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