Fintech stocks like SoFi (SOFI) and Upstart (UPST) have delivered stellar returns. Over the past six months, SoFi has seen a surge of over 138%, while Upstart isn’t far behind, with a gain of 131%. This growth trajectory continues into 2025, with Upstart leading the charge, outperforming SoFi with a 39% rise year-to-date.
Notably, both stocks have benefitted significantly from the U.S. Federal Reserve’s consecutive interest rate cuts, which have provided a favorable environment for growth. But it’s not just the macroeconomic environment that has fueled these gains. Both companies’ strong financial performance has played a key role in driving investor confidence.
For SoFi, the continued growth of its user base is a key contributor to its upward trajectory. By the end of Q4, the company reported having over 10 million members — an impressive 34% year-over-year increase and a tenfold growth over the past five years. Additionally, SoFi expanded its product offerings, adding 1.1 million new products in Q4 alone, resulting in a 32% growth to more than 14.7 million products. This expansion in membership and product offerings reflects SoFi’s ability to scale. Moreover, SoFi’s strategy of diversifying into more capital-light, fee-based revenue streams positions it well for future growth, making it an increasingly attractive investment for those seeking long-term upside potential.
On the other hand, Upstart has also demonstrated solid performance, with its recent fourth-quarter results showing strong business momentum. The company’s loan originations saw a substantial increase, which will likely translate into higher revenue in the near term. Additionally, Upstart’s efforts to improve net interest income, optimize conversion rates, and maintain tight control over fixed expenses are all factors that contribute to its positive outlook.
While both companies are well-positioned to benefit from a more favorable interest rate environment, let’s find out which of these fintech stocks have more upside potential.
SoFi Stock’s Bull Case
SoFi’s future growth prospects look promising, driven by a variety of factors. A key tailwind for the company is the current environment of lower interest rates. As borrowing costs decrease, demand for loans rises, which bodes well for SoFi’s core business. The company’s lending portfolio, which has grown steadily in recent years, continues to see strong demand, especially for personal, student, and home loans. In fact, SoFi’s lending products grew by an impressive 21% year-over-year in 2024, reaching 2 million products.
Further, SoFi has been diversifying its business model and now has a growing presence in Financial Services and Technology Platforms. This shift toward fee-based revenue streams helps reduce default risk and creates a more stable foundation for the business. In the fourth quarter, SoFi’s Financial Services and Technology Platforms accounted for a record 49% of its adjusted net revenue, up from 40% the previous year. The combined revenue from these segments grew by 52% year-over-year, reflecting SoFi’s successful push toward capital-light, high-return operations.
Another factor supporting SoFi’s bullish outlook is its growing deposit base, which has risen to $26 billion since the company obtained its bank license in 2022. With a large portion of these deposits coming from direct deposit customers, SoFi benefits from a low-cost funding source. This gives the company a competitive edge in its lending operations, enabling it to offer loans at attractive rates and boost its profitability.
Looking ahead to 2025, SoFi appears well-positioned for continued growth. The company’s positive momentum is supported by lower interest rates, a growing customer base, and a shift toward more sustainable, fee-based revenue streams.
However, Wall Street analysts remain cautious given the recent rally in its share price and maintain a “Hold” consensus rating. Analysts’ average price target suggests potential downside, but the highest price target of $20 implies roughly 17% upside.
Upstart Stock’s Bull Case
Similar to SoFi, the improving macroeconomic environment will support Upstart’s growth. Further, the company’s use of artificial intelligence (AI) in credit underwriting enhances its ability to approve more loans while minimizing risks for its lending partners. This efficiency will likely contribute to top-and bottom-line growth and give it an edge over peers.
In addition to its AI innovations, Upstart is focused on reducing its servicing costs and improving loan performance, which bodes well for its continued growth.
A significant shift in Upstart’s business model is its transition to a more asset-light strategy and a greater emphasis on reducing credit risk. The company has seen an increase in loan originations but has been successful in reducing the amount of loans it holds on its balance sheet. As of the end of 2024, the company had $703 million in loans held directly, down 28% year-over-year. Upstart is also expanding its funding arrangements, further lightening the load on its balance sheet.
Looking ahead, strategic funding agreements are playing a key role in strengthening Upstart’s financial position. The company secured an additional $1.3 billion in funding commitments in the fourth quarter. On top of that, loan volumes from its lending partners are rising steadily, signaling confidence in the platform.
However, Upstart’s stock has experienced a sharp rally, leaving analysts cautious. The stock currently holds a “Hold” consensus rating, and the average price target suggests potential downside. That said, the highest price target of $108 would represent 20% upside.
The Bottom Line
To sum up, both SoFi and Upstart have promising growth prospects for 2025, supported by lower interest rates and strong financial results. However, analysts are cautious due to recent price rallies. While both stocks have the potential for solid returns, the Street-high price target suggests that Upstart currently holds more upside potential.
