Better Growth Stock: SoFi Technologies vs. Affirm

Core Insights - SoFi and Affirm are both high-growth fintech companies aiming to disrupt traditional financial institutions, with SoFi offering a wide range of financial services and Affirm focusing on "buy now, pay later" solutions [1][2] SoFi Overview - SoFi has expanded its services from student loans to include mortgages, auto loans, personal loans, credit cards, insurance, estate planning, stock trading, and banking, positioning itself as a comprehensive digital financial platform [1][4] - The company targets younger, digitally native users and has grown significantly, quadrupling its member base from 2.5 million in 2021 to 10.1 million in 2024, with projections to reach 12.6 million by Q3 2025 [7][8] - SoFi's revenue and adjusted EBITDA are expected to grow at a CAGR of 27% and 44% respectively from 2024 to 2027, driven by its loan platform business, increased deposits, and new features [9] Affirm Overview - Affirm's BNPL platform caters to younger and lower-income consumers, offering microloans without compound interest or hidden fees, and has seen significant growth, with active consumers increasing from 7.1 million in fiscal 2021 to 23 million in fiscal 2025 [10][11] - The company has secured partnerships with major merchants like Amazon and Walmart, contributing to its gross merchandise volume (GMV) growth from $8.3 billion to $36.7 billion during the same period [11] - Analysts expect Affirm's revenue to grow at a CAGR of 25% from fiscal 2025 to 2028, with adjusted EBITDA projected to increase at a CAGR of 131% through 2028, supported by the growing usage of its Affirm Card and international expansion [14] Valuation Comparison - SoFi has an enterprise value of $32.5 billion, trading at 31 times this year's adjusted EBITDA, while Affirm has an enterprise value of $27.2 billion, trading at 24 times this year's adjusted EBITDA [15] - Despite both companies being strong growth stocks, Affirm is considered more attractive due to its narrower focus, superior growth rates, and lower valuations [15]