It hasn't been an easy ride for ASX fintech investors.
Over the past six months, Block Inc. (ASX: XYZ) has dropped 23%, while Zip Co Ltd (ASX: ZIP) has plunged a brutal 66% at the time of writing. Both buy-now-pay-later (BNPL) players have been hit by a perfect storm of market volatility, regulatory pressure, and shaky investor sentiment.
But here's the big question: is this a rare buying opportunity — or a value trap?
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Block: Global reach, diversification
This $45 billion ASX financial stock brings serious scale and global reach to the table. Through its Square and Cash App ecosystems, Block has built a powerful payments and financial services platform spanning merchants and consumers.
That diversified model is a major strength, giving Block multiple growth levers beyond BNPL. The company formerly known as Square is also deeply embedded in the US market, which continues to lead in fintech innovation.
However, risks remain. Profitability has been uneven, and exposure to consumer spending makes it sensitive to economic slowdowns. There's also ongoing scrutiny around BNPL and digital payments.
Despite this, many analysts remain constructive. Several brokers continue to rate the ASX financial stock as a buy, pointing to its long-term growth potential and the possibility of a strong rebound as macro conditions stabilise.
Analysts have set a 12-month average price target of $163.67, implying a 92% upside at current levels of $85.29. The most bullish target is $256, which points to a whopping potential gain of 200%.
Zip: Higher risk, higher reward
Zip tells a more volatile story — but potentially a more explosive one. The ASX financial stocks has built a recognised BNPL brand, particularly in Australia, and is now focused on improving margins and driving profitability.
Its strategy centres on increasing revenue per customer and tightening credit quality, which could lead to a more sustainable business model. That's the upside.
The downside? Execution risk is high. Zip is still working to convince the market it can consistently deliver profits, and competition in the BNPL space remains intense. Add in regulatory uncertainty and shifting consumer behaviour, and it's easy to see why investors have been cautious.
Even so, some brokers see deep value at current levels. A number of analysts have maintained buy or even strong buy ratings on the ASX financial stock. They suggest the share price may have fallen too far relative to its long-term potential.
The average price target is $4.21, which suggests a 173% upside, while the most optimistic forecast is a 241% gain at the current share price level of $1.54.
So, where does that leave investors?
Both Block and Zip have been heavily sold off — but they're not broken businesses. The 2 ASX financial stocks operate in a sector that's still evolving, with digital payments and flexible finance continuing to gain traction globally.
The key difference comes down to risk tolerance. Block offers scale, diversification, and a more established footprint. Zip, on the other hand, is a higher-risk, higher-reward play that could deliver outsized gains if it executes well.
The bottom line? These ASX financial stocks have been smashed, but that's often when the biggest opportunities emerge. If sentiment shifts and execution improves, a doubling — or more — isn't out of the question.
