These two stocks had a lot of hype in 2020 and 2021 but crashed, and they have been trying to reclaim their former glory ever since.Some of the newer financial technology stocks (or fintechs) have endured wide-ranging interest rates, making for a wild ride. Upstart Holdings (UPST -2.70%) and SoFi Technologies (SOFI -0.61%) went public between 2020 and 2021 amid zero-percent interest rates intended to buoy the U.S. economy during the coronavirus epidemic.However, these rates ultimately inflated a stock market bubble that popped once the Fed aggressively raised rates to combat post-pandemic inflation. Today, both stocks remain well below their former highs.Early-stage growing companies like these are never easy to gauge, and the volatile economy has only added to the challenge. So, which fintech stock is the better buy for the future?Here is what you need to know.Exploring our two contenders:SoFi Technologies is primarily a digital bank, although it has a fintech unit (Galileo) that provides technology services for 160 million users across various financial apps and products. SoFi’s banking business continues to grow. Its customer count has risen from just over a million in early 2020 to 9.3 million as of the third quarter of 2024.The company’s explosive user growth helped it expand its top and bottom lines. It became profitable on the basis of generally accepted accounting principles (GAAP) in 2024 despite facing headwinds caused by a federal student loan repayment pause from 2020 to 2023. Student loan financing was SoFi’s largest business before the pandemic.Upstart uses proprietary artificial intelligence (AI) algorithms to evaluate borrowers’ creditworthiness for consumer loans. The company prefers to originate loans and refer them to partner banks or institutional investors. It has proved it can be highly profitable, generating a significant GAAP profit in 2021.Rate hikes happened so quickly from 2022 to 2023 that Upstart’s business collapsed. Loan demand faltered, and the company got stuck holding loans on its books after buyers dried up. Today, the company is losing money, and its loan volume hasn’t recovered, though growth has returned since the Fed started lowering rates late last year.One company has a slight edge in today’s economy.Following its zero-percent policy, the Fed’s 2022-2023 rate hikes created one of history’s steepest cycles. Barring extreme circumstances, the Fed should move slower to change rates. Now is the right time to evaluate how each company may fare in today’s economy.Banks like SoFi earn net interest income from the difference between what they pay on deposits and what they earn on loans. Higher rates can widen that spread, but they must not be so high that fewer people borrow. As the federal pause ends and financing activity picks up, it could be a boon for SoFi’s student loan business.Upstart’s business has begun picking up momentum. The company has been able to move loans off its balance sheet, and loan volumes
