I Compared SoFi and Chime… One Stock Clearly Wins

Let's go ahead and talk about SoFi versus Chime. This is two different fintexs that I wanted to cover because people have really been pointing to Chime's stock price reaction after last earnings and saying that Chime is the real fintech winner and that SoFi has been a loser for years and not worth holding really not performing the way that Chime is performing in the way that SoFi should be performing. So before people start freaking out and rotating their portfolios, I wanted to give not just the numbers for Chime, not just the numbers for SoFi, but really put a onetoone comparison on as many of the metrics that we could compare one to one. And there's still some parts where it's not exactly a one toone comparison, but it's as close as we can make it based on the numbers and the data that we have. Let's quickly talk about Chime versus SoFi. Which is the fintech name that deserves an investment from you? Which one deserves to be cut? Let's have a look. First up, we have to talk about overall members. Now, this breaks out into two different categories. SoFi's total members and Chimes active members. This is where we don't exactly have onetoone data on this. Now, whenever we look at things like revenue per member, it's going to greatly benefit Chime because it's not every member. This is only members that within the last month have made a revenue producing decision like whether that's tapping your debit card on a machine or making an instant withdrawal or using my pay which is one of their services. Those types of things would consider you to be an active member. SoFi just counts the total amount of members that have funded accounts on their platform. This is the difference. Now there's two different things that I want to point out. One is the total amount nearly 15.8 8 million versus the overall 10 million of Chime. But it's really the growth rate as well. Even though Chime could have a lot more members total than SoFi, the growth rate should technically be the same because you don't want to have less overall members being active members over time. So, if Chime was a faster growing business, they should still show up as a faster growth rate here than SoFi. And they're not. You can actually see this here. SoFi's three-year increase about 153%, Chime about 76%. Even if the total number of members on Chime is higher than Sofi's excluding their active members, it still should be of similar growth rate and it's roughly half. On top of that, whenever you talk about the total amount of new member ads versus the active member ads that Chime has, SoFi is not only extremely high, but that difference is actually getting wider and wider. They are just bringing on so many new users right now and that's leading to overall revenue. Now this can be compared one to one. How much revenue are you bringing in which then flows down into profitability eventually and we can talk about that in a second. One you end up seeing back in Q2 of 2023 SoFi brought in about $488 million. Around that time Chime brought in around $300 million. Very close. But obviously this has scaled and SoFi has continued to put up extremely high growth rates on their revenue which has brought them up to over 1.2 billion. Chime around $670 million of total revenue. That growth in overall revenue has led SoFi to grow about 146%. Chime grew at around 117%. This is an exact equivalent. On top of that, whenever you talk about revenue per total member and revenue per active member, which should greatly, greatly benefit Chime because you're cutting out all the people who are not making money, so we're including everyone. Still, per active member every single quarter for the last 3 years, SoFi has made more revenue per member than Chime. Huge, huge flex there for SoFi. And then on top of that, whenever you're talking about profitability, and we don't just need to talk about the sheer dollar amount. What I'm really looking to here is the margin. every dollar of profit that comes into the platform, how much of that is flowing to the bottom line from an adjusted EBIDA standpoint because Chime isn't really net income positive or at least not for the full year. So, that's not a great comparison. I'm trying to compare them on a margin that at least would show up for them and still were really about double the profitability comparing a 15% margin to a 30% margin and that's been consistently higher than Chime for the last 3 years. So way more profitable and maybe partially because of that is how they acquire a customer. SoFi acquires a customer for roughly about $300 to $350 per user and that's been pretty consistent for the last 3 years. Sometimes a little bit lower but they've been actively trying to spend more. Now Chime has these spikes here in Q2s. So I wouldn't compare it one to one on Q2 but it's really where they see a big lack of new user growth because they have people falling off the platform and the churn's really high on Chime. It's roughly 50% of people delete their accounts, stop using Chime within the first year. Q1, the reason why you end up seeing Q1 have extremely low customer acquisition and then Q2 have extremely high customer acquisition is because they bring all the users on Q1. They have tax benefits. They're trying out the platform and then they leave the next quarter. SoFi, you don't really see a lot of churn ever and they kind of have a consistent way of monetizing their users. So whenever you're talking about consistency, SoFi also wins here in my opinion. Not to mention even a lot of the quarters that even are just regular quarters like Q3 and Q4, Chime still ends up having higher customer acquisition. That brings me to valuation as well. One is a faster growing business. One has more overall members. It's a faster growing, more profitable company. And that brings us to where does this sit from a forward price to sales ratio. Chime used to be much cheaper, deservingly so. And as of recently, as of this latest tick up in their overall price, that ratio has essentially brought these companies to an even level. Even though their guide is way worse, I mean like 20 plus% growth, much lower margin than SoFi. SoFi has 30 plus% growth long-term even though they're putting up 40 today and 40% EPS growth. They're still roughly about the same price on a forward price to sales ratio. and then forward price to earnings that profitability. Look how cheap SoFi is getting in respect to Chime. Chime in blue here, SoFi in orange. Chime ends up showing up with a 49.7 times on the forward PE, SoFi about 24 times. So, if you are investing in a company like one of these very fast new agile fintech companies, I have to give a lot of credit to SoFi here at these prices because it's a great price to be buying the company. Higher growth, higher margins. There's really not a reason to be betting on Chime right here in my opinion. Just a quick little update on why I'm kind of rotating out of my Chime position and potentially even putting more of it into SoFi, which I've not made an exact call on that right now. It is one of the biggest positions in my entire portfolio. But there's a reason why I continue to be extremely bullish and excited about the company's future is because they are executing. There's some companies that come in and can seem like really hot names, but it just comes down to the numbers eventually. What's your revenue growth? How much are customers staying on the platform? What does that flow to the bottom line? Sofi wins across the