Better Fintech Stock: SoFi Technologies vs. Robinhood Markets

Globe and Mail

4 hours ago

Digital bank SoFi Technologies (NASDAQ: SOFI) and online brokerage Robinhood Markets (NASDAQ: HOOD) both leverage their innovative platforms to disrupt the traditional financial services sector. Their strong growth rates have translated into impressive returns: Shares of SoFi are up 95% in the past year, while Robinhood stock has climbed by a remarkable 246%. After such large gains, some investors may wonder if they can keep their rallies going.
Let's consider which of these fintech leaders is a better buy for your portfolio today.
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The case for SoFi Technologies stock
SoFi Technologies has transformed from a student and personal loans specialist into a comprehensive financial services platform. Its digital-first, one-stop shop approach resonates with consumers. Today, it serves 10.9 million members, nearly twice as many as it served just two years ago.
In the first quarter -- in what CEO Anthony Noto described as a "tremendous start to 2025" -- SoFi's adjusted net revenue surged 33% year over year while adjusted earnings per share (EPS) climbed 200% to $0.06. The bank's success reflects its ongoing diversification beyond lending products into more fee-based services, as its members are increasingly utilizing more of its banking accounts, credit cards, investing options, and other financial products.
SoFi is now positioned for more consistently profitable growth and high-quality cash flows. Management expects the positive trends to continue: It's targeting full-year adjusted EPS of $0.27 to $0.28 -- nearly double the $0.15 result in 2024. This outlook highlights a key advantage of SoFi over Robinhood Markets, which faces greater earnings uncertainty, as its business is still tied to transaction volumes and shifting financial market conditions.
Investors who are confident in SoFi's ability to execute its growth strategy and capture more market share from legacy banks have compelling reasons to buy and hold the stock for the long term.
The case for Robinhood Markets stock
As robust as SoFi's operating and financial results have been, Robinhood's recent momentum has been even stronger.
In the first quarter, net revenue increased 50% while EPS more than doubled to $0.37 from $0.17 in the prior-year period. The company that redefined retail investing with its pioneering commission-free trading model is capitalizing on its 25.8 million funded accounts, where users are trading more actively and directing more of their total assets to the platform.
Much of the growth story stems from the cryptocurrency market boom. Crypto now represents 43% of the platform's total transaction volume and contributes 27% of total revenue. Still, Robinhood Markets is also diversifying its product and service offerings with professional-level trading tools, banking solutions, wealth management options, and the premium Robinhood Gold subscription, all of which are increasing the company's customer wallet share. Wall Street has cheered Robinhood's traction, sending the stock up 94% year-to-date to a high that surpassed the pandemic-era peak it set in 2021.
Robinhood aims to replicate its U.S. success as it expands globally. It plans to launch service in the Asia Pacific region, and is bolstering its presence in the digital asset space through its recent acquisition of crypto exchange Bitstamp.
Those international ambitions, compared to SoFi's more domestically focused operations, could support greater long-term top- and bottom-line growth, which would help justify the stock's premium valuation. Notably, both Robinhood and Sofi are trading at forward price-to-earnings (P/E) ratios near 50, suggesting the market's optimism about their potential is fairly equal.
Investors who take the view that Robinhood is just getting started on its path toward a dominant position in the online brokerage space should consider making the stock a part of a diversified portfolio.
HOOD PE Ratio (Forward) data by YCharts.
My verdict: An edge to SoFi stock
Choosing which of these is the better fintech stock to buy now isn't easy. I'm bullish on both and predict each will deliver positive returns over the next year. If I were forced to pick just one to buy, though, I'd give the edge to SoFi Technologies, which appears to offer a compelling buy-the-dip opportunity with shares still down about 27% from their 52-week high.
In my view, SoFi stands to benefit more from a resilient macroeconomic backdrop, fueling lending demand and earnings growth in the coming quarters, which would provide catalysts for the stock to rally higher. Meanwhile, Robinhood must contend with the lofty expectations baked into its stock price following its recent surge. The market's hopes for it could prove difficult to meet, potentially setting the stage for renewed stock price volatility ahead.
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