2 undervalued fintech stock

Last year I made some changes in my portfolio and added some stocks from the finance sector. I think small caps are way cheaper now than large and mid caps and since I'm concentrating on growth I find these a great opportunity currently. Both of these business had a tick up in stock price in mid 2025 but at the end of the year they dropped significantly which convinced me to buy because their fundamentals haven't changed. Both of these companies has lean headcount which is quite important to me. This helps keep sbc and expenses at lower rate while enabling them to pay more for marketing and capex. # 1. Sezzle inc. A fee/subscription based BNPL provider, platform. They also have subcription models **Premium** offers bnpl option when purchasing from partner brands and **Sezzle Anywhere** offers the same but for any visa card accepted purchases**.** Sezzle anywhere helps them counter the larger bnpl providers who has more cash to pay a retailer to add them as payment option. The company focuses more on the subscription model than on-demand fees because it has greater retention and purchase activity. Some highlights from latest earnings report: * *Quarterly GMV rose 58.7% YoY exceeding $1 Billion for the first time* * *Total Revenue increased 67.0% YoY reaching a new quarterly high* * *Net Income Per Diluted Share in the quarter grew 70.5% YoY to $0.75; Adjusted Net Income Per Diluted Share climbed 51.1% YoY to $0.71* * *For FY2025, Sezzle is raising guidance for Net Income Per Diluted Share, Adjusted Net Income Per Diluted Share, and Adjusted EBITDA* * *Introducing FY2026 Adjusted Net Income Per Diluted Share guidance of $4.35* Risks: Regulationary and increased interest rates Fundamentals based on finviz: * PE: 20.99 * Forward PE: 15.46 * PEG: 0.35 # 2. Pagaya technologies Pagaya technologies helps banks and loan providers to analyze the borrower's credit risk based on thousands of data points. If approved, the loan is funded by Pagaya’s network of institutional investors. Pagaya earns a fee for the transaction but typically does not keep the loan on its own balance sheet, significantly reducing its direct credit risk. Q3 report highlights: * *Raises full-year guidance for Total Revenue, Adjusted EBITDA, and GAAP Net Income* * *Record performance across all key metrics:* * *$23 million GAAP Net income; up $90 million YoY* * *$107 million Adjusted EBITDA; up 91% YoY* * *$350 million Total revenue and other income; up 36% YoY ○ $2.8 billion Network volume; up 19% YoY* Risks: defaulting borrowers, margins on fluctating interest rates They reached profitability q1 in 2025 but 2024 q4 net losses drags down the PE ratio so they have negative PE TTM. This will likely change on Monday since they report q4 then. Forward PE 12.03 **This is not financial advice. Always do your own research, read their reports and investor presentation before investing. Small caps has more potential to grow but also to fail.**