STNE vs. UPST: Which Fintech Stock Should You Pick Now?

A comparative analysis of fintech stocks StoneCo (STNE) and Upstart (UPST) positions StoneCo as a more resilient investment, citing its strong Q2 2025 performance with 27% net income growth and 22% ROE despite Brazil's challenging macro environment, alongside stable funding, strategic asset sales, and a lower valuation at 1.92x Price/Sales. Conversely, Upstart demonstrated explosive 102% revenue growth and a return to profitability in Q2 2025, driven by its AI lending model, but its model is considered more volatile due to exposure to credit cycles and capital market sentiment. The article concludes that StoneCo offers a more balanced, durable, and strategically focused opportunity with less cyclicality, supported by valuation and recent outperformance.

Analysis

StoneCo (STNE) demonstrated robust performance in Q2 2025, achieving a 27% year-over-year adjusted net income increase and a 22% return on equity, despite Brazil's challenging macroeconomic environment. The company's MSMB payments segment grew its client base by 17% to 4.5 million, while its integrated banking platform saw deposits climb 36% year-over-year, with 83% now time-based, indicating a stable funding base. Strategic asset divestitures, such as the Linx software unit, are freeing capital for core fintech operations and shareholder returns, evidenced by BRL 2.6 billion in share repurchases. StoneCo's business model is characterized by less volatile revenues and lower cyclicality compared to its peer.

Conversely, Upstart (UPST) posted a dramatic resurgence in Q2 2025, with revenues surging 102% year-over-year to $257 million and a return to GAAP profitability with $5.6 million in net income, ahead of expectations. This growth was driven by its AI-powered Model 22, which improved loan separation accuracy by 17 percentage points, leading to a 23.9% conversion rate and 92% automated loans. However, Upstart's model carries higher volatility due to its exposure to credit-sensitive borrowers and reliance on capital market sentiment, making it vulnerable to economic downturns and funding channel instability.

From a valuation perspective, StoneCo appears more attractive, trading at a forward 12-month Price/Sales multiple of 1.92x, significantly below Upstart's 4.13x, and both are below their five-year medians. STNE also holds a Zacks Value Score of 'B' compared to UPST's 'F', and its shares have outperformed UPST and the S&P 500 over the past three months. Zacks estimates project a 15.73% sales and 22.86% EPS increase for STNE in 2025, with EPS estimates trending northward, while UPST anticipates a 73.32% sales rise.

The divergent risk profiles, with StoneCo offering durability and less cyclicality versus Upstart's explosive but volatile growth, are key differentiators. StoneCo's strategic focus on an underpenetrated Brazilian market and its strong financial metrics position it as a more balanced and resilient fintech option, supported by favorable valuation and analyst sentiment.

Key Decisions for Investors

• Consider StoneCo (STNE) for its demonstrated resilience, stable funding, strategic capital allocation, and attractive valuation metrics, particularly for investors seeking durability and lower cyclicality in fintech.
• Approach Upstart (UPST) with caution, acknowledging its impressive AI-driven growth and return to profitability, but be mindful of its inherent volatility tied to credit cycles and capital market sensitivity.
• Monitor macroeconomic indicators, particularly interest rates and credit conditions in Brazil for STNE, and capital market sentiment and funding channel stability for UPST, as these significantly impact their respective business models.