Robinhood Markets (HOOD +4.45%) and SoFi Technologies (SOFI +3.55%) both want to disrupt traditional financial institutions with their fintech platforms. Robinhood simplified investing with its streamlined app and commission-free trades. SoFi, which initially only offered student loans, has evolved into a one-stop online shop for various financial services.
Over the past 12 months, Robinhood's stock has surged more than 400% as SoFi's stock rallied nearly 170%. Let's see why these stocks soared -- and which one is a better buy.
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Robinhood's speculative investors are returning
Robinhood mainly serves smaller retail investors than larger brokerages. To subsidize its free trades, it sells its clients' trades to high-frequency trading (HFT) firms, which bundle together those tiny orders into bigger batches to generate slim profits from every rapid-fire trade.
Robinhood gained a lot of new investors during the buying frenzy in meme stocks, growth stocks, and cryptocurrencies in 2020 and 2021. A lot of that growth was fueled by low interest rates, stimulus checks, social media buzz, and a contagious "fear of missing out" (FOMO).
NASDAQ: HOOD
Key Data Points
As interest rates rose in 2022 and 2023, many investors rotated toward more conservative and higher-yielding investments. That rotation chilled Robinhood's growth as its core investors placed fewer trades and transferred less money to its platform. But as interest rates declined in 2024 and 2025, those investors returned and its revenue surged. Its number of funded accounts reached 27.4 million at the end of the second quarter of 2025, which was more than double its 12.5 million accounts at the end of 2020.
From 2020 to 2024, its annual revenue more than tripled from $959 million to $2.95 billion. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) stayed positive in 2023 and more than doubled in 2024, and it turned profitable on a generally accepted accounting principles (GAAP) basis in 2024. That rapid expansion can be attributed to its physical Cash Card, its new digital payment features, and its perk-filled Gold subscription plans -- which grew 76% year over year to 3.5 million subscribers in the second quarter of 2025.
From 2024 to 2027, analysts expect Robinhood's revenue and adjusted EBITDA to grow at a compound annual growth rate (CAGR) of 24% and 34%, respectively, as it continues to disrupt traditional brokerages and expand its ecosystem to challenge other fintech companies. But with an enterprise value of $122.5 billion, it isn't cheap at 40 times next year's adjusted EBITDA.
SoFi's strongest headwinds are dissipating
SoFi provides a wide range of loans, insurance policies, estate planning services, credit cards, and stock trading tools. It officially became an online bank upon receiving a U.S. bank charter in 2022, while its fintech subsidiary, Galileo, provides its own payment and card issuing services.
SoFi grew rapidly because it attracted younger and digitally native users who didn't want to deal with brick-and-mortar banks and wanted to shop for all of their financial services within a single platform. From the end of 2020 to the second quarter of 2025, its number of unique members surged from 1.9 million to 11.7 million as its number of products soared from 2.5 million to 17.1 million. Galileo, which operates independently of SoFi, serves nearly 160 million accounts.
NASDAQ: SOFI
Key Data Points
From 2020 to 2024, SoFi's revenue grew at a CAGR of 47%. Its adjusted EBITDA turned positive in 2021 and rose at a CAGR of 181% over the following three years. It also turned profitable on a GAAP basis in 2024. It achieved that growth even as it grappled with the temporary freeze on student loan payments (from 2020 to 2023) and higher interest rates, which curbed the market's appetite for new loans. Its transformation into a full digital bank also temporarily drove up its expenses and reduced its margins.
From 2024 to 2027, analysts expect SoFi's revenue and adjusted EBITDA to grow at a CAGR of 25% and 40%, respectively. Its business is gradually maturing, but its two biggest headwinds are dissipating -- student loan payments have resumed and interest rates are declining. It's also been rolling out more features for its "super app" of financial services as it uses its recent acquisition of Technisys (a cloud-based core banking platform) to support Galileo's growth. With an enterprise value of $33.9 billion, its stock still looks reasonably valued at 22 times next year's adjusted EBITDA.
The better buy: SoFi
Robinhood and SoFi could both grow much larger over the next few years. But if I had to choose one over the other in this frothy market, I'd pick SoFi because it's better diversified, it's growing slightly faster, and its stock looks cheaper relative to its growth potential. Robinhood is still a solid investment, but the next market downturn could crush its valuations while driving away many of its core investors. When that happens, Robinhood might become a more appealing stock than SoFi.
