Better Fintech Stock: Upstart vs. SoFi Technologies
Upstart's growth is accelerating again as interest rates decline.
SoFi will benefit from lower rates and resumed student loan payments.
The pricier stock is still the better long-term pick.
10 stocks we like better than Upstart ›
Upstart (NASDAQ: UPST) and SoFi Technologies (NASDAQ: SOFI) are both growing fintech companies. Upstart's online lending marketplace uses AI to crunch non-traditional data points to approve a wider range of loans than traditional credit-scoring services. SoFi is challenging traditional banks as a one-stop digital shop for myriad financial services.
Upstart went public via a traditional IPO at $20 on Dec. 16, 2020, and it now trades at $63. SoFi went public by merging with a special purpose acquisition company (SPAC) on June 1, 2021. Its stock opened at $21.97, but it now trades at roughly $23. Let's see why investors embraced Upstart but shunned SoFi -- and if that trend will continue.
Upstart's growth is warming up again
Upstart's platform approves loans for banks, credit unions, and auto dealerships. Instead of reviewing traditional data like an applicant's FICO score, credit history, or annual income, it uses its AI algorithms to analyze non-traditional data points -- which can include previous jobs, standardized test scores, and GPA -- to approve a broader range of loans for younger and lower-income applicants with limited credit histories. It fully automates most of those approvals.
Upstart's growth can be measured through its originated loans, conversion rate (the ratio of total inquiries leading to approved loans), and contribution margin (the ratio of its fees it retains as revenue). Here's how it fared over the past five years.
Metric
2020
2021
2022
2023
2024
Originated loans growth
40%
338%
(5%)
(59%)
28%
Conversion rate
15%
24%
14%
10%
16.5%
Contribution margin
46%
50%
49%
63%
60%
Revenue growth
42%
264%
(1%)
(39%)
24%
Data source: Upstart.
In 2022 and 2023, Upstart's growth decelerated as soaring rates chilled the market's demand for new loans. Many lenders also cautiously reined in their own offerings. But as Upstart's top-line growth slowed down, its contribution margin improved as it automated more loans and locked in a higher mix of "super prime" borrowers to boost its take rate for each loan.
In 2024, its growth accelerated again as interest rates declined. From 2024 to 2027, analysts expect its revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at a CAGR of 36% and 245%, respectively. Those are robust growth rates for a stock that trades at just 22 times next year's adjusted EBITDA.
SoFi's growth is still cooling off
SoFi provides a wide range of loans, insurance policies, estate planning services, credit cards, banking services, and stock trading tools. It obtained a U.S. bank charter in 2022, and it operates as a digital-only direct bank that doesn't run any brick-and-mortar branches.
That streamlined approach enabled SoFi to expand at a much faster rate than traditional banks, as seen in its growth in members, total financial products in use, and total revenue over the past four years. Its adjusted EBITDA margin also expanded from 3% in 2021 to 26% in 2024.
Metric
2021
2022
2023
2024
Members
2.5 million
5.2 million
7.5 million
10.1 million
Products in use
1.9 million
7.9 million
11.1 million
14.7 million
Revenue growth
74%
60%
35%
26%
Data source: SoFi Technologies.
However, the temporary suspension of student loan payments from 2020 to 2023, rising interest rates, and other macro headwinds throttled SoFi's growth. It also faces tougher competition from "neobanks" like Chime and Robinhood Markets, dedicated lending platforms like Upstart, and expanding fintech giants like PayPal.
On the bright side, two of those headwinds are dissipating. The freeze on SoFi's student loan payments has ended, and interest rates will likely keep declining. From 2024 to 2027, analysts expect SoFi's revenue and adjusted EBITDA to grow at a CAGR of 25% and 37%, respectively.
That bright outlook implies that while SoFi's hypergrowth days might be over, it should continue to grow at an impressive rate as it gains even more members, expands its ecosystem with fresh features, and profits from the expansion of its fintech subsidiary Galileo, which it acquired in 2020 and now serves nearly 160 million accounts on its own. Like Upstart, SoFi's stock also looks cheap relative to its growth potential at 19 times next year's adjusted EBITDA.
The winner: Upstart
Upstart and SoFi are both promising fintech stocks. But if I had to choose one over the other, I'd buy Upstart because it's growing faster, experiencing accelerating growth (instead of just stabilizing growth), and faces fewer direct competitors. SoFi still has to prove it can maintain its edge against its growing list of competitors.
Should you invest $1,000 in Upstart right now?
Before you buy stock in Upstart, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Upstart wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $668,155!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,106,071!*
Now, it's worth noting Stock Advisor's total average return is 1,070% — a market-crushing outperformance compared to 184% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of August 13, 2025
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