Rising trade tensions, particularly President Trump’s tariffs, have prompted investors to reassess their outlook on consumer spending, the economy, and interest rates. This reassessment has contributed to a notable downturn for several fintech companies. A review of sector stocks indicates that SoFI Technologies (NASDAQ: SOFI) offers a more attractive investment option in comparison to Block Inc. (NYSE: XYZ), which was previously referred to as Square. Currently, SOFI stock is priced higher at about 5x trailing revenues, versus 1.3x for Block. Nevertheless, our analysis indicates that SOFI is likely to outperform XYZ in the coming years, fueled by its stronger revenue growth trajectory and better profitability metrics.
Our evaluation, grounded in a comprehensive analysis of historical revenue performance, investment returns, and comparative valuation metrics, leads us to believe that SoFi presents a more compelling investment opportunity within the Fintech sector over the next three years. The following analysis will delve deeper into the reasoning behind this conviction. However, if you’re seeking an upside with a steadier experience than an individual stock, consider the High Quality portfolio, which has exceeded the S&P, achieving >91% returns since its inception. Separately, see – Google’s $1 Trillion Problem: Stock To Crash 40%?
How SoFI and Block Are Expanding Their Sales
SoFI has recorded a 39% average annual revenue growth from 2021 to 2024, increasing from $985 million to $2.6 billion. This marginally surpasses Block’s 37% average annual growth, which saw its revenue grow from $10 billion to $22 billion during the same period.
Fueled by a steady increase in its membership base, which reached a record 10.9 million in Q1 2025 (a 34% year-over-year rise), SoFi’s revenue growth is additionally driven by the strong performance of its financial services, supported by products such as SoFi Money, Relay, and Invest. This expansion is bolstered by SoFi’s continuous efforts to enhance user experience through platform upgrades, increased partnerships, and the launch of valuable new features like Zelle and improved wire transfers.
Block’s revenue growth in recent years has largely been driven by the continuous expansion of its Square ecosystem, which provides payment processing and software solutions for sellers, and its Cash App platform, allowing for peer-to-peer payments and financial services for users. This growth has also been accentuated by strategic partnerships, such as Cash App’s collaboration with Lyft to widen user reach. Additionally, the introduction of new features and products across both platforms, including enhanced financial services and Bitcoin mining initiatives, aims to deepen user engagement and diversify revenue streams. The company’s ongoing commitment to product development and AI-driven innovations positions it for promising future sales growth.
Net Margin Trends
From 2021 to 2024, SoFI saw a marked improvement in its net margin, rising from -49% to 19%. This is linked to a growing revenue base and the increasing contribution of the higher-margin Financial Services and Technology Platform segments to the overall revenue mix, benefitting the net margin.
Conversely, Block Inc. experienced its net margin increase from 2% to 13%. For Block, the expansion in margin is attributed to diversification from Bitcoin revenue. In 2024, net income reflected a substantial remeasurement gain on Bitcoin investments, positively influencing the net margin.
Financial Risk Analysis: A Balance of Debt and Cash in Fintech Stocks
When evaluating financial risk, SoFI and Block present a relatively balanced scenario. While SoFI’s debt-to-equity ratio of 22% is more favorable than Block’s 27%, the latter’s cash-to-assets ratio of 35% exceeds SoFI’s 12%. Essentially, SoFI illustrates a stronger debt profile, whereas Block maintains a more solid cash position.
SOFI and XYZ: Comparing 4-Year Stock Returns Against the S&P 500
Over the last four years (from early January 2021 to the present), while the S&P 500 has risen by approximately 50%, the performance of SOFI stock has remained relatively stagnant, moving from $12 to about $13, albeit with considerable annual volatility: +27% in 2021, -71% in 2022, +116% in 2023, and +55% in 2024. This contrasts with the S&P 500’s steadier returns of +27% in 2021, -19% in 2022, +24% in 2023, and +23% in 2024, highlighting SOFI’s underperformance relative to the index in 2022.
In stark contrast, XYZ stock has seen a dramatic 75% drop from $220 to around $50 during the same timeframe, consistently performing worse than the S&P 500 in each of the past four years with returns of -26% in 2021, -61% in 2022, +23% in 2023, and +10% in 2024. As an aside, see – XRP Price To $5?
SOFI Stock: The Superior Fintech Investment Choice?
We believe SoFi currently offers a more favorable investment compared to Block Inc. This is mainly due to SoFi’s strong revenue growth, rising profitability, and similar financial risk profile, supported by its well-rounded and effectively cross-selling financial services platform across lending, financial services, and technology segments. In comparison, while Block’s larger ecosystem comprising Square and Cash App offers significant scale, it also brings complexity that may lead to relatively slower growth in specific areas. This fundamental performance disparity is evident in their valuations: SoFi trades at a price-to-sales ratio of 5 (slightly under its four-year average of 5.5), while Block’s P/S ratio stands at 1.3 (well below its four-year average of 3.7).
For investors looking to mitigate the intrinsic volatility tied to individual stocks like SOFI and XYZ, alternative investment strategies are available. The Trefis RV strategy, known for its history of surpassing its all-cap stock benchmark, offers a diversified pathway to potentially secure solid returns. Similarly, the High Quality portfolio has demonstrated superior performance compared to the S&P 500, yielding returns that surpass 91% since its inception, providing potential upside with lower stock-specific risk.
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