2 Fintech Stocks to Buy After Losing Over Half Their Value

SoFi and Circle have each lost more than half their value from record highs (Circle about 70%), despite article-cited growth prospects and potential benefits from higher interest rates. SoFi reported 15.8 million members, up 35% year over year, and expects adjusted net revenue growth of 32%-35%; Circle faces competition from proposed stablecoin OpenUSD and uncertainty after the Senate failed to pass the CLARITY Act, while analysts expect revenue growth of 10% and adjusted EBITDA growth of 21%. The article presents both as potential turnaround investments, conditional on SoFi avoiding a rise in non-performing loans and Circle sustaining stablecoin adoption.

Analysis

The key mispricing risk is treating higher rates as an unqualified tailwind. For SOFI, asset yields may reset faster than funding costs, but deposit competition can erase that benefit; tighter household cash flow can also lift delinquencies and charge-offs with a lag. The 1–3 month test is therefore not headline growth but deposit-cost trends, net interest margin, and credit performance. Over 6–18 months, fee growth would make earnings less dependent on rate direction, but only if product adoption converts into durable revenue.

CRCL has the opposite sensitivity: higher reserve yields can support earnings per token, while high rates may dampen token growth and make yield-bearing alternatives more attractive. A rate cut could compress reserve income even as it potentially encourages broader risk appetite and digital-asset activity. The consortium behind OUSD is not proof of switching: distribution, liquidity, redemption confidence, and regulatory treatment matter more than governance claims. Conversely, regulatory clarity could expand institutional use but also constrain yield-sharing economics or increase compliance costs.

Contrarian view: the drawdowns alone do not establish value. SOFI’s lower stated EBITDA multiple may compensate for credit and funding-cycle risk; CRCL’s higher multiple embeds execution on token adoption and policy. Near term, SOFI offers the cleaner conditional setup, while CRCL is a catalyst-driven watch rather than an automatic rate hedge.

Key Decisions for Investors

• Prefer a staged, modest SOFI long only after results confirm stable deposit pricing and net interest margin alongside contained delinquencies and charge-offs. Reassess if credit quality deteriorates or funding costs rise faster than loan yields; do not underwrite the thesis to rate increases alone.
• Keep CRCL on a catalyst watch rather than buying solely on the reserve-income argument. Track USDC circulation and redemption activity, reserve yield, distribution economics, and whether OUSD gains actual liquidity and usage. A sustained contraction in USDC adoption would falsify the growth thesis.
• For the next 1–3 months, monitor Fed guidance and bank deposit competition as shared factors, but expect different equity responses: rate-driven margin relief may help SOFI only if credit holds, while CRCL depends more directly on reserve yield and token growth. Avoid a simplistic long-SOFI/short-CRCL pair until those operating trends diverge clearly.
• Over 6–18 months, treat U.S. stablecoin legislation as a two-sided catalyst for CRCL: clearer rules may support institutional adoption, but could alter yield distribution or raise compliance costs. Verify the enacted provisions and partner economics before adding exposure.