Both OppFi Inc. OPFI and Futu Holdings Limited FUTU are fintech companies employing technology to reshape traditional financial services. Growth-oriented investors seeking to dip their fingers in the fintech domain are attracted to this disruptive innovation.
Futu Holdings offers fully digitalized financial services in terms of online brokerage and wealth management, mainly serving the China market. In contrast, OppFi provides alternative lending solutions to underserved and underbanked U.S. customers. Despite operating in different markets, both companies aim to challenge traditional financial services by deploying top-tier technology.
As these companies reconfigure the financial services landscape, the question arises: which of these two fintech-giants offers a more compelling opportunity today?
The Case for OppFi
OPFI’s strategy to provide affordable credit to underbanked customers has created a unique position in the market that is expected to grow, seeing 13% CAGR, and hit the $7-trillion mark by 2032. The success is driven by the company’s inclination to leverage AI and ML-based technology to cater to the subprime and non-prime credit holders who are often overlooked by traditional financial institutions.
Continuous enhancements of OPFI’s ML model have assisted it in improving the credit evaluation process and identifying and approving applicants with higher credit quality. In 2024, the company launched Model 6, which is superior at identifying risks of long-term charge-offs and targeting quality borrowers at the top of the funnel. Technology as such enhances risk separation and allows for seasonal segmentation and modeling throughout the year.
The company’s continuously improving automated loan approvals in OppLoans, sending tremors within the traditional financial services ecosystem. In the fourth quarter of 2024, 79.5% of loans were approved in seconds without any human intervention, gaining 630 basis points (bps) from the fourth quarter of 2023. This advancement contributed to disciplined cost management, lowering expenses before interest expenses by 60 bps year over year in the fourth quarter of 2024. Therefore, the tech-based disruptor narrative serves OPFI’s bottom line well.
The Case for Futu Holdings
FUTU challenges traditional brokerage services by offering a fully digital, user-friendly platform with low fees. The implementation of DeepSeek adds to its business model, which increases operational efficiency as the company utilizes AI for internal operations. This has translated into improving operating income and margin by 116% and 690 basis points year over year, respectively, in the fourth quarter of 2024.
The company has immersed itself in extracting the full potential of AI to benefit the masses. In Hong Kong, it launched a synthesis function for individual stocks, twice a day. FUTU has introduced automatic interpretation of corporate announcements and analysis of the financial results. These advancements are targeted to improve client experience in terms of understanding the market dynamics to make investment decisions quickly.
Futu Holdings' product velocity remained high in the fourth quarter of 2024. It delivered 209 iterations of its mobile application and desktop clients, and 7,762 new features. In Japan, the U.S. margin trading was launched, which increased the adoption rate. In the United States, Option Strategy Builder for desktop was revealed to enhance traders’ capabilities to navigate various option trading strategies.
This innovation-led strategy suits the company’s mindset of accelerated client acquisitions. It witnessed the number of registered clients increase 28.7% year over year in the fourth quarter of 2024 and the total number of users shot up 16.2%. Higher client acquisitions translated into the top line surging 87% year over year in the fourth quarter of 2024.
How Do Estimates Compare for FUTU & OPFI?
The Zacks Consensus Estimate for FUTU’s 2025 sales and EPS indicates year-over-year growth of 19.1% and 31.5%, respectively. Two estimates for 2025 have moved north in the past 60 days versus one southward revision.
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The Zacks Consensus Estimate for OPFI’s 2025 sales and EPS indicates year-over-year growth of 9.7% and 12.6%, respectively. Two estimates for 2025 have moved north in the past 60 days versus no southward revision.
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OPFI’s Valuation More Attractive Than FUTU
Futu Holdings is trading at a forward earnings multiple of 12.57X, below its 12-month median of 14.22X. OppFi’s forward earnings multiple stands at 8.41X, higher than its median of 6.73X.
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Verdict
Both OPFI and FUTU are exciting fintech players, but OPFI emerges as a smarter buy. OppFi’s focus on using advanced AI and ML to serve the underserved U.S. credit market gives it a distinct edge. Its continuous tech enhancements have streamlined loan approvals and improved risk management, strengthening operational efficiency. While Futu Holdings’ innovation in digital brokerage is impressive, OPFI’s ability to disrupt traditional lending, target a fast-growing market, and deliver tech-driven cost advantages makes it a more compelling opportunity for growth-focused investors today.
OPFI sports a Zacks Rank #1 (Strong Buy) and FUTU has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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