SoFi vs. OppFi: Which Fintech Stock Offers Better Momentum Now?

Core Insights - SoFi and OppFi are both growth-oriented fintech companies that are reshaping the traditional finance landscape, with SoFi focusing on prime borrowers and OppFi targeting subprime borrowers [1] Group 1: SoFi Overview - SoFi's growth strategy is significantly supported by its acquisition of Galileo, a B2B financial service platform, which enhances its position in the embedded finance market projected to grow at a CAGR of 16.8% through 2029 [2] - The company reported a 20% year-over-year growth in revenue for Q1 2025, with net income increasing by 217%, showcasing strong operational efficiency [4] - SoFi's member base grew by 34%, adding 800,000 members in the quarter, which improved cross-selling capabilities and reduced customer acquisition costs [5] - The Financial Services segment saw a remarkable 101% growth, while Lending and Technology Platforms grew by 25% and 10% respectively, indicating strong product potential [6] Group 2: OppFi Overview - OppFi targets underbanked customers, creating a niche in the alternative lending market expected to grow at a CAGR of 25.4% from 2025 to 2030 [7] - The company achieved a 10.1% year-over-year growth in revenue for Q1 2025, with adjusted net income soaring by 285.1%, reflecting strong operational leverage [8] - OppFi successfully reduced its net charge-off rate by 700 basis points from the previous quarter and 1300 basis points year-over-year, demonstrating effective risk management [9] - The company reported a 16% increase in net originations and a rise in auto-approval rates to 79%, up from 73% in the previous year [11] Group 3: Financial Estimates and Valuation - The Zacks Consensus Estimate for SoFi's 2025 sales is $3.3 billion, indicating a 26.2% year-over-year growth, with earnings expected to surge by 80% [12] - OppFi's 2025 sales estimate is $578.4 million, implying a 10% year-over-year growth, but earnings are projected to decline by 29.5% [15] - SoFi trades at a forward P/E ratio of 41.76X, while OppFi trades at 10.99X, suggesting that OppFi offers a more attractive valuation for investors [10][16] Group 4: Investment Outlook - OppFi is recommended as a strong buy due to its focus on underbanked customers and impressive quarterly results, while SoFi is rated as a hold due to its higher valuation [18][19]