It seemed like SoFi Technologies (SOFI 1.66%) stock was finally making headway again after impressing investors with its phenomenal results last year. But it's back down again since the Nasdaq correction, and it's 48% off of its highs.
With the market in flux, tariffs on the table, and talk of a recession, investors might be considering taking a step back. But this might be the last time to buy SoFi stock on the dip, and you might want to grab this opportunity.
Why SoFi is winning
SoFi is an all-digital bank that's capturing attention for its easy-to-use app that targets students and young professionals. It's growing quickly and scaling profitably, and it's successfully expanding beyond its core lending segment to offer a complete array of financial products and services.
Customers are joining at a fast rate, with total count increasing 34% in 2024 to 10.1 million, including 785,000 in the fourth quarter. SoFi has a multi-pronged growth strategy that involves drawing new customers and upselling and cross-selling new products, increasing engagement, revenue, and profits.
The loan segment is still its largest, but the non-lending segments, which include financial services and its tech platform, are growing faster and accounting for more and more of the total. They increased from 40% of the total to 49% of the total year over year in 2024. Here's a breakdown of how revenue and profits increased in the fourth quarter for each segment and on a consolidated basis.
| Segment | Revenue Growth | Product Growth | Profit Growth |
|---|---|---|---|
| Consolidated | 19% | 32% | 594% |
| Loans | 18% | 21% | 9% |
| Financial services | 84% | 34% | 358% |
| Tech platform | 6% | 15% | 5% |
Data source: SoFi quarterly reports. All growth is year over year. Tech platform product growth was in total accounts.
Finance is going digital
Past performance can provide confidence in the company's successful model, but ultimately, you're investing because you can see incredible opportunities down the line.
SoFi is attracting a young, upwardly mobile consumer that's looking for the digital experience SoFi offers. They're likely just starting their financial journeys, and their financial needs will grow over time. CEO Anthony Noto sees it as a given -- when, not if -- that SoFi will become a top-10 U.S. financial institution. Ninety percent of SoFi Money deposits come from direct deposits, implying a financially healthy customer and continued increases.
NASDAQ: SOFI
Key Data Points
For 2025, management is guiding for revenue to increase 23% to 26%, with a 65% increase in financial services and in the teens for the loan segment and tech platform. Longer-term, it's looking for a compound annual growth rate of 20% to 25%, and it's guiding for loan growth to remain in the teens for near future.
It's still in expansion mode, launching new products and features to engage customers and make sure they continue to manage their money on its platform. It recently launched SoFi Plus, a membership program that offers better rates and discounts. It's free for direct deposit customers and $10 a month for anyone else, and it claims to unlock $1,000 in value annually. It sees tremendous opportunity in its SoFi Invest tools, which offer more than the standard investing platform, including access to some initial public offerings (IPOs) and unique investment products. It launched a robo-advisor platform to help users use the platform more effectively.
Priced for perfection, or priced to buy?
SoFi stock isn't cheap, but it looks reasonable for how fast it's growing and its future opportunities. It trades at a forward one-year P/E ratio of 28 and price-to-book ratio of 2.2.
SoFi isn't for the risk-averse investor, since it's only recently profitable and still dealing with economic volatility. However, if you have some appetite for risk and can hold for at least a few years, SoFi looks like a compelling buy right now.
