Webull Might Be the Most Undervalued Fintech Stock

When most people think about fintech stocks, they gravitate toward Robinhood (NASDAQ: HOOD) and SoFi (NASDAQ: SOFI). However, Webull (NASDAQ: BULL) might be the most undervalued of the bunch.

It's similar to Robinhood. The fintech company lets users open brokerage accounts, trade in prediction markets, and access private markets. Webull is growing at a fast clip, but as more people catch on, Webull shares have a shot at outperforming Robinhood in 2027. Here's what makes the stock special.

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Webull is growing faster than Robinhood

Both companies operate in the same industry, but Webull is growing faster than Robinhood in multiple key metrics. Its revenue and registered users were up by 51% and 13% year over year, respectively. Robinhood commanded only 32% year-over-year revenue growth and a 9% year-over-year boost in the number of investment accounts on its platform.

That comparison is important because Webull also trades at a lower valuation than Robinhood. While Webull has a forward price-to-earnings (P/E) ratio of less than 15, Robinhood's is 34.

Webull has managed to expand its global footprint while bolstering its artificial intelligence (AI) capabilities to attract new users. Its Vega Analyst AI tool makes it easier to get custom-made stock reports, and this should help Webull stand out in the crowded brokerage industry.

Prediction markets are attracting new customers

Almost every brokerage company that has implemented prediction markets has seen its revenue and user bases swell in size. Robinhood refers to prediction markets as "event contracts" in its quarterly reports. That part of the business was microscopic last year, but it brought in $156 million in the second quarter, more than 10 times higher year over year. Event contracts now make up more than 10% of Robinhood's total revenue.

Webull's prediction market engine is just getting started. Revenue from that segment was roughly $5 million to $6 million, and it grew by 71% sequentially.

That's a small slice of Webull's $198.8 million in Q2 revenue. If it becomes a larger slice, as happened with Robinhood, then Webull has a meaningful opportunity to ramp up revenue. That's not even including a 68% year-over-year uptick in options trading volume and a 73% year-over-year boost in equity notional volume.

Those results show that investors shouldn't be excited only about prediction markets. Stock and options trading are still growing businesses for Webull.

Profit margins are expanding

Webull isn't just a growth story. Its widening profit margins and commitment to buying back shares also make it a value story. Its $24.4 million in net income is a big swing from a $28.3 million net loss in the same quarter last year. Adjusted net income almost tripled year over year.

Rising profit margins explain why Webull has a lower forward P/E ratio than Robinhood. It also presents an opportunity. Robinhood's Q2 results featured a 43% net profit margin, while Webull had only a 12% net profit margin. If Webull can reach margins like Robinhood's in the future, its net income would more than triple, excluding revenue growth.

In the meantime, Webull continues to buy back shares. It repurchased and canceled 1.8 million Class A ordinary shares with an average purchase price of $6.03. That's part of the company's broader plan to buy back as much as $100 million worth of shares during the next 12 months, more than 3% of the stock's market cap.

Webull is a fast-growing, pro-shareholder business with solid fundamentals and rising profit. It has long-term tailwinds, and it's positioned to potentially beat the broader market in 2027 and beyond.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool recommends Robinhood Markets. The Motley Fool has a disclosure policy.