Upstart Holdings vs. 360 Finance: Which FinTech Stock is a Better Choice?

Fintech companies have been in the limelight owing to a significant increase in remote financial transactions amid the COVID-19 pandemic. The trend is expected to continue in the foreseeable future thanks to rapid digitalization. So, both 360 DigiTech (QFIN) and Upstart Holdings (UPST) could witness increasing demand for their solutions. But which of these two stocks is a better buy now? Read more to find out.

Headquartered in Shanghai, China, 360 DigiTech, Inc. (QFIN) operates a digital consumer finance platform under the 360 Jietiao brand. Its platform provides online consumer finance products to borrowers, funded by institutional funding partners. In comparison, California-based Upstart Holdings, Inc. (UPST) operates a cloud-based artificial intelligence (AI) lending platform. Its platform aggregates consumer demand for loans and connects it to its AI-enabled bank partners’ network.

Data security concerns and cyber-attacks are affecting the growth of most fintech companies. However, the industry still holds immense upside potential in this digital era due to rapid technological advances based on improvements in the internet of things (IoT) and artificial intelligence (AI). According to a The Expresswire report, the Fintech market is expected to grow at an 8.6% CAGR over the next three years. As a result, both QFIN and UPST should benefit.

UPST has gained 398.9% so far this year, while QFIN has returned 58.6%. Also, UPST’s 99% gains over the past six months are higher than QFIN’s negative returns. Moreover, in terms of past months’ performance, UPST is the clear winner with 70.3% gains versus QFIN’s negative returns.

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On August 9, QFIN announced that its 360 Jietiao app was being restored to app stores for downloads. The app was earlier temporarily taken offline by the Cyberspace Administration of China. However, the company said that the temporary suspension of new downloads did not have a material adverse impact on its operations.

UPST and NXTsoft announced a partnership on June 23, 2021, that will enable UPST to implement its all-digital AI lending platform more efficiently to any U.S.-based financial institution. Michael Lock, senior vice president of lending partnerships for UPST, said, “NXTsoft offers Upstart-powered banks and credit unions a proven approach to integrate our AI lending platform into their existing core systems and workflow to accelerate time to value and be in market with a new offering for their customers."

Recent Financial Results

QFIN’s total net revenue increased 13.1% year-over-year to RMB 3.60 billion ($549.30 million) for its  fiscal first quarter ended March 31, 2021. The company’s non-GAAP income from operations grew 533% year-over-year to RMB 1.62 billion ($246.9 million), while its non-GAAP net income increased 452.8% year-over-year to RMB 1.41 billion ($214.7 million).

UPST’s total revenue increased 1,018% year-over-year to $194 million for its  fiscal second quarter, ended June 30, 2021. The company’s total fee revenue grew 1,308% year-over-year to $187 million, while its contribution profit increased 2,171% to $96.7 million.

Expected Financial Performance

Analysts expect QFIN’s revenue to increase 630.9% in its fiscal year 2021 and 9.7% in fiscal 2022. The company’s EPS is expected to grow 722.9% in the current year and 18.2% next year.

In comparison,  UPST’s revenue is expected to increase 201.6% in its fiscal year 2021 and 37.1% in fiscal 2022. Its EPS is expected to grow 369.6% in fiscal 2021 and 41.7% in fiscal 2022.


QFIN’s $2.13 billion trailing-12-month revenue is higher than UPST’s $472.40 million. QFIN is also more profitable, with an EBIT margin and net income margin of 71.23% and 33.34%, respectively, compared to UPST’s 17.09% and 12.30%.Furthermore, QFIN’s ROE and ROTC of 54.94% and 70.44%, respectively, compare with UPST’s 2.78% and 3.46%.


In terms of forward non-GAAP P/E, UPST is currently trading at 133.61x, which is significantly higher than QFIN’s 3.63x. Furthermore, UPST’s 112.25x forward EV/EBITDA ratio is higher than QFIN’s 2.06x.

So, QFIN is the more affordable stock.

POWR Ratings

QFIN has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. In contrast,  UPST has an overall rating of C, which translates to Neutral. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

QFIN has a B grade for Quality. This is justified given its 70.44% trailing-12-month ROTC, which is 991.4% higher than the 6.45% industry average. UPST, in comparison, has a Quality grade of C, which is consistent with its 3.46% trailing-12-month ROTC, which is 46.4% lower than the 6.45% industry average.

QFIN also has a B grade for Value, consistent with its forward EV/EBIT of 1.96x, which is 84% lower than the 12.28x industry average. However, UPST has a D grade for Value, which is in sync with its 158.31x forward EV/EBIT, which is  1,189.4% higher than the 12.28x industry average.

Of the 51 stocks in the Consumer Financial Services industry, QFIN is ranked #5. However, UPST is ranked #74 of 104 stocks in the Financial Services (Enterprise) industry.

Beyond what we’ve stated above, we have also rated both the stocks for Momentum, Stability, Sentiment, and Growth. Click here to view all the QFIN ratings. Also, get all the UPST ratings here.

The Winner

The fintech industry is expected to grow significantly due to the rapid adoption of advanced technological solutions in the financial sector. While both QFIN and UPST are expected to gain in the long run, we think it is better to bet on QFIN now because of its relatively lower valuation, higher profitability, and better growth prospects.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Consumer Financial Services industry here. Also, click here to access all the top-rated stocks in the Financial Services (Enterprise) industry.

QFIN shares were trading at $17.22 per share on Monday afternoon, down $1.48 (-7.91%). Year-to-date, QFIN has gained 46.06%, versus a 19.94% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.


The post Upstart Holdings vs. 360 Finance: Which FinTech Stock is a Better Choice? appeared first on
Data & News supplied by
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.