Futu vs. Upstart: Which Fintech Stock Fits Your Portfolio Best?

Futu Holdings FUTU and Upstart Holdings UPST both sit in the fintech world, but they give investors exposure to very different stories. Futu is a digital brokerage and wealth management platform with a strong base in Hong Kong and growing international markets. Its business benefits when investors trade more, move more assets onto the platform and use margin, wealth management, IPO and related services. Upstart, on the other hand, is an AI lending marketplace that helps banks, credit unions and other funding partners make consumer loans using its underwriting models.That difference matters. Futu is more tied to market activity, client assets, cross-border regulation and investor risk appetite. Upstart is more tied to credit demand, funding availability, underwriting quality and the ability to scale personal loans, auto loans, home equity products and newer credit lines. Both companies are growing in important spheres, but the risk profile and investor takeaway are not the same. Let’s consider the two of them in depth and find out which one has a stronger risk-reward balance right now.The Case for FUTUFutu’s first-quarter results still showed real operating strength on the surface. Funded accounts rose 34.3% year over year to about 3.59 million, total users reached 30.2 million, and client assets climbed 47.2% to HK$1.22 trillion. Trading volume also increased 29.1% to HK$4.15 trillion, helped by Hong Kong and U.S. stock activity. Compared with Upstart, Futu’s model looks more mature and already highly profitable at the operating level, with a broad set of brokerage, wealth management, margin and corporate services.The problem is that this strength comes with more market sensitivity than investors may like. Futu depends heavily on trading activity, client asset levels and risk appetite. If equity markets weaken or clients pull back from margin and active trading, revenue momentum can cool quickly. Upstart also has macro risk because credit demand and funding conditions matter, but Futu’s results can swing with investor sentiment in a more direct way. That makes the stock harder to own when markets are volatile.Regulation is the bigger concern. Futu received an Administrative Penalty Pre-Notification Letter from the China Securities Regulatory Commission Shenzhen Bureau involving penalties of about RMB1.85 billion. The company said the amount was reflected in its first-quarter financial statements and does not affect business fundamentals or financial stability. Still, for investors, this is not a small event. It reminds the market that Futu’s cross-border brokerage model carries regulatory risk that can arrive suddenly and weigh on confidence.That issue changed the tone of the quarter. Despite strong revenue and operating growth, reported net income fell 61.2% year over year to HK$831 million (US$106.0 million), while adjusted net income dropped 58.5%. Before the penalty impact, the business would have looked much healthier, but investors cannot ignore the fact that the penalty is now part of the story.The Case for UPSTUpstart’s story is not a totally bright one, but it is moving in the right direction. In the first quarter, originations grew 61% year over year to about $3.4 billion, while revenues rose 44% to $308 million. The company still posted adjusted EBITDA of $40.5 million, down from $42.6 million in the year-ago period, while adjusted EBITDA margin was 13%, down from 20% in the year-ago period, so this is not a risk-free recovery story. However, compared with Futu’s recent regulatory shock, Upstart’s challenges look more tied to business execution, funding conditions and credit performance.The main reason to stay constructive on Upstart is that its platform is scaling again. The company originated more than 425,000 loans in the quarter, and its personal loan business remains the core engine. Management also pointed to strong growth in auto and home products, with auto originations up more than 300% year over year and home originations up around 250%. Futu has scale in brokerage accounts and client assets, but Upstart has a clearer path to expanding across multiple consumer credit categories.Upstart’s AI underwriting remains the key differentiator. Management said its personal loan model continued to improve versus a traditional credit benchmark, and the company reported that 91% of loans were fully automated with no human intervention by Upstart. Such a level of automation can help the company process more loans while improving the borrower experience. It does not remove credit risk, but it gives Upstart a technology-led angle.There are still reasons to stay balanced. Contribution margin declined, and adjusted EBITDA was lower than the prior year. Credit performance also needs to remain steady for the model to work well. Even so, Upstart reiterated its full-year 2026 outlook and highlighted more than $4 billion in new committed capital partnerships.How Do Estimates Compare for Futu & Upstart?The Zacks Consensus Estimate for Futu’s 2026 and 2027 sales implies year-over-year growth of 1.61% and 4.20%, respectively. The consensus mark for 2026 and 2027 EPS suggests a year-over-year decline of 13.19% and an increase of 20.68%, respectively. Over the past month, estimates for FUTU’s 2026 and 2027 EPS have been revised southward.For Futu Holdings:Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Upstart’s 2026 and 2027 sales calls for year-over-year growth of 36.53% and 30.61%, respectively. The consensus estimates for both 2026 and 2027 EPS have been revised marginally upward over the past 30 days. The figures suggest a year-over-year increase of 30.46% and 44.93%, respectively. For Upstart:Image Source: Zacks Investment ResearchPrice Performance and Valuation of FUTU & UPSTOver the past three months, Upstart shares have risen 39%, while Futu shares have declined 26.6%. In comparison, the S&P 500 composite has advanced 16.3% in the same time frame.Image Source: Zacks Investment ResearchFUTU is trading at a forward 12-month price-to-earnings of 9.78X, which is below its one-year median of 15.96X. Meanwhile, UPST is presently trading at a forward 12-month price-to-earnings of 12.15X, which is well below its one-year median of 30.64X.Image Source: Zacks Investment ResearchConclusion: UPST Has the EdgeFutu and Upstart both offer fintech exposure, but they are not equally attractive right now. Futu’s user growth, trading volume and client assets are impressive, yet the sharp drop in reported net income and the CSRC penalty create a cloud over the stock. Upstart is not perfect, but its originations growth, AI-driven automation, product expansion and reaffirmed outlook make the story more constructive. For now, UPST looks like the better stock to consider and hold, while FUTU looks better to sell. Estimate revisions also suggest that Upstart stands out as the better fintech currently.While UPST carries a Zacks Rank #3 (Hold), FUTU has a Zacks Rank #5 (Strong Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks