Is SoFi (SOFI) Stock a Buy After Recent Underperformance?

SoFi Technologies, Inc. (SOFI) has had quite a tumultuous journey in the stock market, outperforming the S&P 500 Index for the past two consecutive years but now finding itself in the red amid shifting investor sentiment. Just recently, the stock plummeted more than 10% over the last month after the company provided disappointing earnings guidance for the year 2025. In this article, we will dissect SoFi’s current financial standing and determine if now is the time to buy this stock after its troubling dip.

SoFi’s 2025 Earnings Guidance: A Closer Look

SoFi’s earnings per share (EPS) guidance for 2025 fell short of consensus estimates, projecting a range between $0.25 and $0.27. CEO Anthony Noto attributed this underwhelming forecast to the company’s strategic decision to invest in long-term growth instead of short-term profitability. While Noto emphasizes that such investments will pave the way for projected annual revenue growth of 20%, it has undoubtedly rattled some investors.

Growth Dynamics in SoFi’s Business Model

Despite the recent setback, SoFi has been consistently evolving. The company boasts a member base that has skyrocketed by 34% year-over-year, surpassing the 10 million milestone by the end of 2024. The company’s growth in membership presents ample cross-sell and upsell opportunities; approximately 40% of new members opened another product within 30 days of signing up.

The Lending business, a vital element of SoFi’s portfolio, exceeded expectations with an 11% rise in revenues last year, a testament to effective management that sidesteps prevailing credit risk. Additionally, SoFi’s launch of loans under its loan platform business (LPB) originated a whopping $2.1 billion last year, serving clients who might not have received loans elsewhere. By doing so, the company not only secures risk-free fee-based income but also capitalizes on cross-selling opportunities for other offerings.

Looking Ahead: Potential for Accelerated Growth in 2026

SoFi is placing its bets on 2026 for notable acceleration in growth. The company has been selected by the U.S. Department of Treasury to manage the Direct Express prepaid debit card program that caters to approximately 3.4 million Americans receiving federal benefits. While integration is scheduled for 2025, SoFi anticipates financial benefits will arise the following year. Additionally, a partnership with a major U.S. financial services firm is set to advance their mutual interests, potentially ranking SoFi among its top clients by 2026.

In a bullish tone, SoFi forecasts revenue growth above the previously expected range of 20%-25%, while eyeing an EPS of between $0.55 to $0.80. The long-term perspective remains equally promising, with an annual EPS growth target of 20%-25% extending beyond 2026.

Analyst Sentiment and Market Positioning

It’s critical to note that the sentiment amongst sell-side analysts remains lukewarm, assigning a consensus rating of “Hold” for SoFi. The average target price stands at $13.89, which lags behind current trading levels, while the most optimistic forecast from Needham estimates a street-high target price of $20—38% above the closing prices as of February 26.

Although SoFi has enjoyed a notable price increase of 124% over the last two years, analysts remain concerned about its valuations, which some believe appear inflated. The tangible book value noted at the end of 2024 was just $4.47 per share, and the price-to-earnings multiple of 55x appears steep in comparison to peer financial institutions.

Final Thoughts: Is SoFi Worth the Investment?

Despite the prevailing uncertainties and the stock’s recent downturn, SoFi presents a case of substantial potential for long-term growth driven by an expanding member base and innovative service offerings. While it might be true that current valuations appear elevated, anyone considering an investment should adopt a long-term viewpoint, particularly when examining SoFi’s EPS guidance for 2026, which takes the company’s projected P/E ratio down to around 21x.

SoFi has demonstrated resilience and a staunch focus on its future financial viability. The market may appear cautious now, but for conservative investors willing to ride out the volatility, this might represent an opportune time to stake a position in a company aiming to redefine the financial services landscape.