Block vs. Upstart: Which Fintech Stock Has More Upside Right Now?

Core Insights - The fintech sector is undergoing significant transformation driven by innovations in digital payments, credit underwriting, and user experience, with Block, Inc. and Upstart Holdings emerging as key players due to their disruptive business models and strategic growth initiatives [2][3]. Block's Case - Block is developing a comprehensive fintech platform through its Square, Cash App, and Afterpay ecosystems, providing end-to-end solutions across various financial services [4]. - In Q3 2025, Block's net revenues increased by 2.3% year-over-year, with gross profit rising by 18.3%, driven by Cash App's growth of 24.3% and Square's increase of 9.2% [4][9]. - New product introductions, such as Cash App Pools and enhancements to Square's AI assistant, are aimed at deepening user engagement and expanding service offerings [5]. - Block is aggressively investing in partnerships to enhance its market position, including collaborations with Thrive and Blackbird Bakery to improve service delivery [6]. - Despite its growth, Block faces challenges from shifts in consumer spending and increasing competition from peers like PayPal and Shopify [7]. Upstart's Case - Upstart operates as an AI-driven lending marketplace, connecting consumers with over 100 banks and credit unions, and reported a 71% revenue increase year-over-year in Q3 2025, with loan originations climbing by 80% [8][9]. - The company has diversified its offerings beyond personal loans into auto lending, HELOCs, and small-dollar loans, which accounted for nearly 12% of total originations in Q3 2025 [10]. - Upstart's AI automation powered 91% of loans in Q3 2025, enhancing scalability and reducing approval times [12]. - The company continues to expand its lending partnerships, aiming to increase its market reach [11]. - However, Upstart's reliance on AI-driven models poses risks, particularly in economic downturns, though management has initiated upgrades to mitigate volatility [13]. Comparative Estimates - The Zacks Consensus Estimate for Block's 2025 sales implies a modest growth of 0.8%, with EPS expected to decline by 28.2% [14]. - In contrast, Upstart's 2025 sales are projected to grow by 62.8%, with positive trends in EPS estimates over the past 60 days [16][17]. Valuation and Performance - Over the past month, Block and Upstart shares have increased by 1.8% and 1.6%, respectively, outperforming the S&P 500 [19]. - Block is trading at a forward Price/Sales (P/S) ratio of 1.48X, while Upstart's P/S ratio stands at 3.64X, both below their one-year medians [19]. Conclusion - Block has a strong payments ecosystem but faces short-term challenges from consumer spending and competition, while Upstart shows clearer operating leverage and growth potential through AI-driven innovations [21].