PayPal Is Yesterday's News. Is This Fintech Stock the Better Buy?

In the eyes of investors, PayPal (NASDAQ: PYPL) is in a troubling downward spiral. The shares currently trade 82% off their peak (as of Oct. 7), which was set all the way back in July 2021. During that same period of time, the S&P 500 index has climbed 77%.

PayPal looks like yesterday's news. Is another fintech stock the better buy right now?

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PayPal's new reality

When it comes to fintech enterprises generally, and digital payments companies specifically, PayPal might be the first that enters investors' minds. It has been a leader in this industry for quite some time, particularly in online transactions and money transfers. And it wasn't long ago that it was growing briskly, gains that were accelerated by the COVID-19 pandemic.

Between 2015 and 2021, PayPal's revenue was consistently rising at about 15% to 20% per year. It's no surprise that the stock price soared 724% in the five-year period leading up to the all-time high. Then-Chief Executive Officer Dan Schulman even said the business would get to 1 billion users, as he set out to build PayPal into a super app. That playbook was scratched. PayPal went from 377 million users at the end of 2020 to 439 million today, with growth now non-existent.

PayPal's fall from grace has been remarkable. On the one hand, it's still very profitable. And it generates a lot of free cash flow that management plows aggressively into share buybacks.

However, growth has slowed dramatically in one key area, as industry tailwinds faded and intense competition materialized on both the merchant and consumer sides of the business. The company's flagship branded checkout solution has pumped the brakes. Total payment volume (TPV) here increased by 2% during the first and second quarters of 2026 on a year-over-year basis.

During Q2, PayPal's overall TPV grew by 10%. Its transaction margin dollars, a measure of core profitability, increased by just 1%. The company's ability to monetize its established ecosystem is weakening, which is likely what has been harming market sentiment toward the stock.

At a forward price-to-earnings (P/E) ratio of 9.1, PayPal's valuation has gotten extremely cheap. Investors might be tempted to buy shares. But until profit growth returns and even starts to accelerate, the losing streak could continue.

Stick to the winner

Investors don't have to risk betting on a highly uncertain situation. Instead, focus on businesses that continue to operate from a position of strength. This is what's happening with SoFi Technologies (NASDAQ: SOFI). It trades at a more expensive forward P/E multiple of 20.7. The company's fundamental performance, however, is worth the price tag.

SoFi has emerged as a leading digital bank, with its exceptional user experience and a young, affluent target demographic supporting robust growth. Revenue surged by 145% during the three-year period ended June 30. The customer base increased 155% in that time, from 6.2 million to 15.8 million.

One of the biggest catalysts for success has been SoFi's ability to consistently innovate and expand its product lineup. This year, it started offering small business loans. And it launched an artificial intelligence-powered financial coach directly in the app. This is a far cry from the early days when SoFi was just refinancing student loans in 2012. This trend leads existing customers to sign up for new products and services, thereby increasing stickiness.

The market historically liked SoFi's impressive growth. Investors can now appreciate the company's soaring profits. Adjusted net income jumped 112% year over year in 2025. And it's forecast to rise 72% this year. Improving profitability without sacrificing growth is a powerful force.

PayPal shares are undoubtedly cheap. Look out over the next five years, though, and I believe SoFi will generate a better return. Investors will want to buy while it's trading more than 50% below its peak.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short December 2026 $62.50 calls on PayPal. The Motley Fool has a disclosure policy.