XYZ vs. SOFI: Here’s the Fintech Stock I’d Rather Buy This July

Fintech innovators are starting to gain ground again, with names like SoFi Technologies (NASDAQ:SOFI) leading the upward charge, rising more than 180% over the past year. And while it’s tempting to go with one of the less-heated names in the space, such as Block (NYSE:XYZ) as some sort of catch-up trade, I do think investors should ask themselves if the pricier, faster grower is worth the loftier price of admission. Undoubtedly, the relative value play may not always be the best name to go with, especially as macro headwinds persist and industry dynamics shift.

In this piece, we’ll check out two fintech plays in SoFi, the winner poised to keep winning according to some big names on Wall Street, and Block, a relatively modest performer that has a leader (Block head Jack Dorsey) and potential catalysts to spark a bounce as soon as the second half. Let’s have a closer look at both companies to determine how they stack up as an investment for investors looking to put new money to work this July.

Block

First, let’s start with the fintech value play run by the legendary Jack Dorsey. The company seems well on its way to enjoying its own big rebound as Dorsey and company continue to expand the Cash App and Square ecosystems. Combined with new AI innovations and commitment to its blockchain bets, I find Block to be a relatively misunderstood stock whose longer-term growth profile may still be underestimated by most. With Block catching a bid higher as news broke that shares would be joining the S&P 500, investors may wonder what the long-time laggard has in store as it does its best to get above the $50 billion market cap level again.

Evercore ISI upgraded the stock in June, citing “eased” worries about lending risks over at Cash App. Additionally, they also remarked on the potentially uplifting effects of new releases over at Square. With Bitcoin payments now on Square and a slew of other blockchain innovations that could shine a brighter light on the stock, I do view Block stock as one of the cheapest crypto infrastructure plays in a market that has a seemingly insatiable appetite for crypto, stablecoins, and just about anything blockchain-related.

Of course, I wouldn’t look for Block to earn a Robinhood Markets (NASDAQ:HOOD) multiple overnight. However, I do think there’s ample room for the modest 19.2 times trailing price-to-earnings (P/E) ratio to expand over time as it aims to regain its growth edge. In short, Block stock’s a value play with an industry legend at the helm. And it’s a great buy as shares look to get back in the grey after starting the year with a painful drop of more than 50% peak to trough.

SoFi Technologies

SoFi Technologies is what’s working in this market, now up close to 50% year to date and nearly tripling over the span of the past year. Indeed, it feels like the easy gains have been made in the former value stock. At 48.8 times trailing P/E, you’ll be paying a premium for the fintech instead of a discount. Still, Mad Money’s Jim Cramer views SoFi as a buy in spite of its hot run. As the firm opens doors to the private market for everyday retail investors, it’s not a mystery as to why shares have picked up traction in recent weeks.

In a heated market that’s seen many IPOs soar out of the gate, one can only imagine the magnitude of demand SoFi can generate as it offers everyday investors a chance to invest in firms that aren’t yet publicly listed. Indeed, who wouldn’t want to place a bet on SpaceX or OpenAI on a pre-IPO basis?

I think the move is a genius way to win new customers while keeping existing ones engaged. Though I do see the move as replicable by rival fintechs, especially if the initiative hits the spot with investors. With Bitcoin trading and blockchain money transfers on the way, SOFI stock has the right drivers to get back to those prior all-time highs not seen since 2021.

Though it’s expensive, I like SoFi more than Block at this juncture. Notably, its private market offering could be a hit that allows shares to recover fully from the 2021-22 crash.

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