Better Growth Stock: SoFi Technologies vs. Robinhood Markets

Key Points

• SoFi Technologies and Robinhood Markets have revolutionized the banking and investing landscape.

• Both have some risks, but plenty of long-term growth ahead.

• One company's higher floor makes it the superior growth stock of the two.

• 10 stocks we like better than SoFi Technologies ›

SoFi Technologies (NASDAQ: SOFI) and Robinhood Markets (NASDAQ: HOOD) are reimagining how people manage their finances.

Both stocks have been quite volatile, but Wall Street has begun to get on board with their narratives. Both stocks have risen tremendously during the past year; SoFi is up a whopping 200% over the past 12 months alone, only to be outdone by Robinhood's 345% run.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

But which of these red-hot fintech stocks is the better growth stock to buy today and hold for the long term?

This Fool put them through their paces to find out. Here is what you need to know.

Image source: Getty Images.

Disrupting two huge and long-standing industries

The financial sector is one of the largest parts of the economy. It's also one of the oldest. While technology has changed the way we bank and invest our money, it's been the same companies controlling these industries for a long time.

It's hard to breach a wide competitive moat unless you bring something new to the table that people can't ignore. That brings SoFi Technologies and Robinhood Markets into the picture.

For SoFi, the company's comprehensive digital ecosystem has won over consumers from brick-and-mortar banks. Its user base has grown to 10.9 million, up from 3.4 million in 2021. For Robinhood, it pioneered zero-commission stock trades, which were so successful that incumbent brokerages had to follow suit.

Additionally, these companies both aimed their products at younger consumers. SoFi began in the student loan business, positioning itself squarely in front of younger borrowers who are just entering the workforce. It helped SoFi build its brand and expand its offerings. Robinhood has become known for its simplified user interface, especially with individual investors who are new to investing.

These savvy strategies have helped both companies become emerging stars in their respective fields.

Both companies have excellent growth prospects, but there is a winner here

You can see that both companies are rapidly growing, each coming from a small base and surging to multiple billions of dollars in annual revenue in just a few years:

SOFI Revenue (TTM) data by YCharts

SoFi and Robinhood still have considerable growth ahead simply from monetizing their existing customers. The typical SoFi customer uses about 1.5 products on average, leaving enormous room for cross-selling. Robinhood has continued to introduce various products, including retirement accounts, a credit card, and a prediction market.

There are, however, crucial differences. Robinhood generated $1.6 billion of its $2.9 billion in revenue last year from transactions, such as stock and option trades. This can fluctuate with changing investor sentiment. It's why Robinhood's revenue dropped from 2021 to 2022 and 2023, when the stock market slumped and investors traded less.

SoFi is a bank. Therefore, it's at risk of falling loan demand and higher defaults if the economy slows or interest rates increase. The government's student loan freeze during the pandemic also hurt its business. However, SoFi has rapidly expanded its customer base, with a 34% increase in users in the first quarter of 2025 from a year earlier. Now, with the Trump administration moving student loan borrowers back into repayment, SoFi's student loan business could come alive once again.

Both companies have risks tied to the economy and financial markets, but SoFi's explosive customer growth gives it a higher floor in my view, making it the superior growth stock.

Should investors buy the better growth stock right now?

Great, SoFi Technologies is the winner. But should investors rush to buy shares after a 200% rally in just 12 months?

SoFi Technologies is currently one of the most expensive bank stocks on Wall Street, trading at roughly 5 times its book value. For a comparison, JPMorgan Chase trades at 3 times its book value. The caveat here is that SoFi's book value per share has increased by 10% over the past year, versus JPMorgan's 4%.

In other words, SoFi is growing much faster, which helps justify a higher valuation. The counterargument is that JPMorgan is the industry leader with a well-proven track record. Peace of mind has value in the banking industry.

SoFi's valuation is relatively high for a bank stock, so it seems likely that the stock has already realized most of its near-term upside. It could be wise to wait for a pullback to buy after the stock's epic run this past year, although buy-and-hold investors can argue for at least nibbling on the stock, given SoFi's impressive growth potential.

Should you invest $1,000 in SoFi Technologies right now?

Before you buy stock in SoFi Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoFi Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,005,670!*

Now, it’s worth noting Stock Advisor’s total average return is 1,053% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.