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SoFi Surpasses Square with Diversified Product Portfolio and Rapid Revenue Growth

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  Published in Stocks and Investing on Thursday, November 20th 2025 at 13:02 GMT by AOL

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A Quick Look at SoFi vs. Its FinTech Peer: Why One May Be the Better Stock Pick

If you’re looking for a fintech company that can turn a handful of consumer‑facing products into a solid, diversified business model, SoFi (Social Finance, Inc.) has emerged as a favorite among many investors. The company has moved beyond the “student‑loan‑refinance” niche that launched it in 2011 and now offers a full‑service financial stack that includes personal loans, mortgages, investing, banking, insurance, and even a small‑business line of credit. In a recent piece on AOL, the author breaks down why SoFi’s trajectory looks stronger than that of a key competitor (in this case, Square, Inc.) and outlines the data points that support that assessment. Below is a concise summary of the main arguments and data used in that analysis.

1. SoFi’s Growth Story: From Loans to a One‑Stop Financial Super‑App

a. Diversified Revenue Streams

• Student‑Loan Refinancing: Still the flagship product, but its growth has begun to plateau as the market matures.
• Personal & Business Loans: A rapidly expanding segment that now makes up a significant portion of SoFi’s loan portfolio.
• Investing and Wealth Management: SoFi Invest, the robo‑advisor arm, has seen double‑digit growth in assets under management (AUM) since 2021.
• SoFi Bank & Insurance: The digital banking and insurance offerings help keep customers inside the SoFi ecosystem and create additional fee income.

b. Customer Acquisition & Retention

• SoFi’s marketing spend has become more efficient, with a lower cost per acquisition (CPA) compared to early‑stage fintech rivals.
• The company has built a “product‑cannibalization” strategy: customers who start with a student loan often move on to a mortgage, credit card, or investment product, creating cross‑sell opportunities.

c. Financial Metrics

• Revenue Growth: YoY revenue for 2023 was up roughly 35% compared to 2022, largely driven by loan origination and higher investment commissions.
• Profitability Pressure: Despite revenue growth, SoFi’s operating margin is still negative, reflecting heavy marketing and technology spend. The company’s net loss shrank from $260 million in 2022 to about $80 million in 2023, a significant improvement.
• Balance Sheet: The bank holds a sizable liquidity buffer—cash and equivalents exceed $1.5 billion—providing cushion for growth and regulatory requirements.

2. Square: The Benchmark and the Benchmark’s Weaknesses

Square’s financial picture provides a useful counterpoint because it’s also a fintech that began with payments and has since diversified into small‑business lending and a consumer wallet.

a. Core Competencies

• Payments: The core payment-processing business remains the bulk of Square’s revenue (~$15 billion in 2023).
• Cash App: The peer‑to‑peer payment app has grown its user base rapidly, with an AUM of over $70 billion.

b. Challenges Facing Square

• High Valuation: Square’s market cap, relative to revenue, is about 5–6×, higher than SoFi’s 4×. That premium reflects expectations of future growth that may not materialize.
• Profitability Issues: While Square has moved into profitability in certain business lines, its overall margin is lower due to heavy competition in payment processing.
• Limited Diversification: Unlike SoFi, Square’s other businesses (e.g., small‑business lending) are still nascent and rely heavily on the payment ecosystem for growth.

c. Financial Snapshot

• Revenue Growth: 2023 revenue rose 8% YoY, modest compared to SoFi’s 35%.
• Net Income: Square posted a net loss of $500 million in 2023, largely due to investments in product development and acquisitions.
• Balance Sheet: Cash reserves are strong (~$9 billion), but a large portion is tied up in unproductive assets.

3. Key Take‑aways from the Comparison

The author argues that the combination of higher revenue growth, a more diversified product mix, and a tighter valuation multiple gives SoFi an edge over Square from an investment perspective. Moreover, SoFi’s cross‑sell pipeline—where users already inside the SoFi ecosystem are likely to buy additional products—creates a virtuous cycle that Square’s largely siloed payment ecosystem lacks.

4. What This Means for Investors

a. Growth vs. Profitability Trade‑off

SoFi is still investing heavily in growth. The trade‑off is that profitability is not yet stable, but the trajectory suggests that the company is heading toward a breakeven point sooner than its peer.

b. Valuation Discipline

Even though SoFi’s valuation is a bit higher than average fintechs, it is still comfortably below what many analysts predict for a company with its potential. This leaves room for upside if the company meets its projected loan origination and investment AUM targets.

c. Risk Factors

• Regulatory Scrutiny: SoFi’s loan products attract regulatory attention, especially in the mortgage space.
• Competition: Traditional banks and other fintechs (e.g., LendingClub, Upgrade) are aggressively expanding their loan product lines.
• Market Sentiment: Tech‑heavy valuations can be volatile; a broader market downturn could compress both companies’ valuations.

d. Bottom Line

If you’re looking for a fintech company that offers strong growth, a broad product portfolio, and a relatively disciplined valuation—and you’re comfortable with the current loss‑making status—SoFi appears to be the better pick according to the AOL article. Square, while still a formidable player in payments, lacks the same level of diversification and has a higher valuation multiple, making it a potentially riskier proposition for growth‑focused investors.

5. Final Thoughts

The article’s central thesis is that SoFi’s business model, marked by cross‑sell synergies and expanding product lines, positions it for a faster scale‑up than Square. It highlights how SoFi’s ability to keep customers inside a single digital ecosystem could provide long‑term revenue streams that Square’s fragmented product portfolio can’t match.

Investors who prioritize high growth and a broader financial product footprint will likely find SoFi more appealing. Those who value payments dominance and a strong cash‑flow engine might lean toward Square, but that comes at a higher valuation premium. As always, a thorough review of the latest financial statements, upcoming earnings releases, and regulatory developments will be key to confirming these trends before making any investment decisions.