Fintech Stocks Face-Off: SOFI vs. UPST vs. AFRM

After a tough 2022, smart investors know when to make the most of an opportunity. Look no further than defunct fintech companies, for example. At the moment, tthere is a growing need for contactless payment solutions. In addition, there is increasing demand for “Buy now, pay later” services. Leading BNPL supplier Verify inventories (NASDAQ:AFRM), for example, is in focus right now. SoFi technologies (NASDAQ:SOPHIE) may have taken a beating last year, but could change the traditional banking industry. Plus, Upstart (NASDAQ:ESTABLISHMENT) is already using AI to improve its lending platform.

SoFi Technologies (SOFI)

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SoFi Technologies aims at modern banking and tries to change the traditional ways of consumer banking. It targets the new generation of digital bank users, and many call it the bank of the future. However, SOFI stock has fallen more than 50% in the past year and is trading at a low of $5.87. Admittedly, the stock took a hit on the student loan moratorium, but it is temporary.

The SoFi app offers a one-stop solution for users. You can invest, get a credit card, manage your bank account, manage money through a budgeting tool, and read educational articles and learn about finances. Although the company has missed its EPS target in the past two earnings seasons, my colleague at InvestorPlace Luke Lango thinks SoFi stock could deliver 24X gain in 10 years. However, don’t expect the stock to bounce back overnight. It will take time for all fintech stocks to gain strength due to the current economic situation. SoFi is set to report Q4 earnings on January 30.

Upstart (ESTABLISHMENT)

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Upstart is known for transforming the lending industry with the use of artificial intelligence. It takes a solid approach to assessing creditworthiness and uses AI to analyze the profile of an applicant. This ensures an accurate and quick decision, which makes borrowing easier for consumers. However, rising interest rates have not gone down well with the company, and it has not been able to approve as many applications. This has certainly affected the business. But it has products and services that are unique and very successful.

Currently, UPST stock is down more than 80% on the year and is trading at $17. This is your time to jump in if you believe in the products and services of the company. Upcomling is a lender and when the financial situation is difficult, borrowing will rise. This is where the company can win. The stock remains one of the best fintech stocks to add to your portfolio today.

Confirm (AFRM)

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With rising inflation, Buy Now, Pay Later gained massive popularity, and Affirm capitalized on this opportunity. It became one of the leaders in the BNPL economy and collaborated with Amazon (NASDAQ:AMZN) in 2021, which strengthened the business. It also has a collaboration with Walmart (SNEEZE:WMT).

AFRM stock is down 75% for the year and is trading at $14.30 today. However, it is up 55% in the last month. If Amazon and Walmart continue to stick with Affirm and BNPL activity picks up, the stock could rebound sooner than expected. The company is also burning a lot of cash, which could lead to a lower gross margin this year. There are many “ifs” associated with Affirm at this stage. The company reports earnings on February 8.

Pick: Of the top three fintech stocks discussed here, Upstart has the strongest rebound potential. The company can make the most of the current financial situation and increase lending, which will benefit the business. The stock is trading at a discount today and can provide strong returns in the long term. It has a fundamentally strong business that can grow significantly over time.