2 Fintech Stocks That Will Outpace Upstart in the Next 5 Years

The fintech sector has long been a battleground for innovation, but as the industry matures, investors must distinguish between fleeting trends and enduring value. While Upstart Holdings (NASDAQ: UPST) has made strides in AI-driven lending, two peers—SoFi Technologies (NASDAQ: SOFI) and Remitly Global (NASDAQ: RELY)—are poised to outperform it over the next five years. Their superior financial performance, scalable business models, and stronger profit margins make them compelling long-term investments.

SoFi: A Diversified Powerhouse with Margin Resilience

SoFi's 2024 results underscore its transformation from a student loan refinance startup to a diversified financial services giant. The company reported $2.7 billion in GAAP net revenue for 2024, a 26% year-over-year increase, with adjusted EBITDA of $666.5 million and a margin of 26%. This outpaces Upstart's 18% adjusted EBITDA margin in Q4 2024, despite Upstart's 56% revenue growth.

SoFi's strength lies in its three-pronged business model:
1. Financial Services: SoFi Money, Relay, and SoFi Invest generated $63.2 million in loan platform fees in Q4 2024, with a 45% contribution margin.
2. Technology Platform: Partnerships like the U.S. Treasury's Direct Express program and co-branded debit cards with hotel rewards brands add recurring revenue streams.
3. Lending: Net interest income grew 31% YoY in Q4 2024, with a 58% adjusted contribution margin.

SoFi's tangible book value rose to $4.9 billion, and its net interest margin hit 5.91%, reflecting disciplined capital management. Meanwhile, Upstart's reliance on loan origination—despite a 68% YoY transaction volume increase—leaves it vulnerable to interest rate volatility and credit risk.

Remitly: Cross-Border Remittances with Explosive Scalability

Remitly's Q4 2024 revenue of $351.9 million (up 33% YoY) and adjusted EBITDA of $43.7 million (a 434% increase) highlight its dominance in cross-border remittances. With 7.8 million active customers and $15.4 billion in send volume, Remitly's business model is inherently scalable. Unlike Upstart, which still reported a GAAP net loss of $2.8 million in Q4 2024, Remitly expects positive GAAP net income in 2025.

Key advantages include:
- Customer Retention: 32% YoY growth in active customers, driven by trust and simplicity in a fragmented market.
- Margin Expansion: Adjusted EBITDA margins rose to 12.4% in Q4 2024, up from 10.7% for the full year, as operational efficiencies take hold.
- Global Reach: Operating in 170+ countries, Remitly taps into a $800 billion remittance market, where demand is resilient even during economic downturns.

Upstart's AI-driven lending model, while innovative, faces stiffer competition from traditional banks and fintechs. Its 91% automation rate is impressive, but the company's GAAP net loss of $129 million in 2024—despite a $637 million revenue increase—signals unresolved cost pressures.

Why Upstart Falls Short

Upstart's Q4 2024 adjusted EBITDA of $38.8 million (18% margin) is a step forward, but its GAAP net loss of $2.8 million and full-year loss of $129 million highlight structural challenges. The company's reliance on banks and credit unions for loan distribution exposes it to margin compression and regulatory risks. In contrast, SoFi and Remitly have diversified revenue streams and stronger balance sheets.

Moreover, Upstart's contribution margin of 61% in Q4 2024—while strong—pales against SoFi's 58% lending margin and Remitly's 12.4% EBITDA margin. These metrics suggest SoFi and Remitly are better positioned to sustain profitability in a high-interest-rate environment.

Investment Thesis: Act Now, Reap the Rewards

For investors seeking long-term growth, SoFi and Remitly offer a clearer path to profitability than Upstart. SoFi's diversified financial services and technology platform provide recurring revenue, while Remitly's cross-border remittance model benefits from global demand. Both companies are expanding margins and reducing losses, whereas Upstart remains unprofitable on GAAP metrics.

Immediate action is warranted. SoFi's 2025 guidance includes $1.5 billion in adjusted EBITDA, while Remitly's $1.565–1.580 billion revenue target implies 24–25% growth. Upstart, despite its AI edge, lacks the margin resilience and diversified revenue streams to match these peers.

In a sector where scalability and sustainability matter most, SoFi and Remitly are the clear winners. Investors who act now will likely see these stocks outpace Upstart—and the broader market—over the next five years.