Digital Bank SOFI Technology(Nasdaq: Sophie) and online brokerage companies Robin Hood Market(NASDAQ: Food) Both leverage innovative platforms to disrupt the traditional financial services sector. Their strong growth rate has been converted into impressive returns. Sophie’s shares have risen 95% over the past year, while Robinhood shares have risen 246%. After such a large profit, some investors may wonder if they can continue the rally.
Think about which of these Fintech Leaders are better buys in today’s portfolio.
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SOFI Technologies has transformed from student and personal loan experts into a comprehensive financial services platform. Its digital-first, one-stop-shop approach resonates with consumers. Today, it serves 10.9 million members, almost twice the service they had just two years ago.
In the first quarter, CEO Anthony Noto described it as “a huge start to 2025,” with Sophie’s adjusted net revenue rising 33% year-on-year, while earnings per share (EPS) increased 200% to $0.06. Bank success reflects the continued diversification of products outside of lending into more rate-based services, as its members use more bank accounts, credit cards, investment options and other financial products.
SOFI is currently positioned for more consistent, profitable growth and high quality cash flow. Management expects a positive trend to continue. We target our annual adjusted EPS from $0.27 to $0.28 – almost double the $0.15 result in 2024.
Investors who are confident in their ability to implement Sophie’s growth strategy and gain more market share from legacy banks have compelling reasons to buy and hold shares in the long term.
Robinhood’s recent momentum has been stronger, just as Sophie’s operating and financial results are robust.
In the first quarter, net revenues increased 50%, with EPS more than doubled from $0.37 from $0.17 in the previous year. The company that redefines retail investments with a pioneering committee-free trading model is using 25.8 million funding accounts that allow users to trade more aggressively and direct more total assets to the platform.
Many of the growth stories come from Cryptocurrency Market boom. Crypto currently accounts for 43% of the platform’s total transaction volume, contributing 27% of the total revenue. Still, Robinhood Markets diversifies its product and service offerings using professional-level trading tools, banking solutions, wealth management options, and premium Robinhood Gold subscriptions. Wall Street cheered Robin Hood’s traction, bringing stocks to a high that surpassed the peak of the 2021 pandemic era.
Robinhood aims to replicate US success as it expands globally. It is scheduled to launch in the Asia-Pacific region and is strengthening its presence in the digital asset space through its recent acquisition of Crypto Exchange Bitstamp.
These international ambitions could support larger long-term top and bottom line growth compared to SOFI’s more domestically focused operations, which helps to justify the premium valuation of the stock. In particular, both Robinhood and Sofi are trading at a positive price (P/E) ratio of nearly 50, suggesting that market optimism about their potential is fairly equal.
Investors who take the view that Robinhood just started on the road to a dominant position in online securities space should consider making stocks part of their diversified portfolio.
It’s not easy to choose which of these are better fintech stocks to buy now. I’m bullish about both and predict that each will bring positive returns over the next year. However, if you are forced to buy just one, it gives SOFI Technologies an edge. This appears to offer a shopping opportunity for stocks, which has dropped by about 27% from its 52-week height.
In my view, SOFI is making more profits from a resilient macroeconomic background, driving growth in lending demand and revenue for the upcoming quarter, providing a catalyst for stocks to gather higher. Meanwhile, Robinhood has to compete with the lofty expectations burned into stock prices following the recent surge. Market hopes can prove difficult to meet and could set the stage for potentially updated stock price volatility.
Consider this before purchasing inventory with SOFI Technology.
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