SQ vs. SOFI: The Ultimate Battle for the FinTech Throne

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SoFi Technologies and Square Inc. (now called Block) are two popular fintech stocks. SoFi had a significant rally following its fourth-quarter earnings report and its first quarterly GAAP profit, while Block also saw a noticeable rally on the same day. When comparing the two stocks, SoFi appears to have a bullish outlook while Block has a more neutral outlook. SoFi’s recent earnings results showed positive growth and profitability on a GAAP basis, unlike Block, which is profitable on a non-GAAP basis. SoFi’s strong earnings along with its long-term potential make it an attractive buy-and-hold stock. In contrast, Block has diverted significant attention away from its payment processing business toward blockchain and Bitcoin, causing its financial results to be volatile and dependent on cryptocurrency. Block’s financial performance needs to stabilize and show consistent growth outside of Bitcoin in order for its stock price to take off.

In terms of insider trading, there has been significant selling in Block shares recently, although a large non-open-market purchase was made three months ago. This suggests that insiders may not see much upside potential in the near term. Block’s stock has also been range-bound for the past 20 months, indicating limited downside but also limited upside for now. However, if Block refocuses on its payment processing business and achieves steady growth with GAAP profitability, its stock price could see significant gains.

At present, the average price target for Block is $79.76, which represents a potential upside of 16.9%. SoFi, on the other hand, has an average price target of $9.33, implying an upside potential of 10.5%. Overall, while both stocks have potential, SoFi appears to be the better buy for long-term investors.

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