2 Solid Reasons to Buy SoFi Technologies (SOFI) Stock Now


  • SoFi Technologies (SOFI) stock has been beaten down over the past year, despite beating earnings.
  • Investors appear to be pricing in significant headwinds into the company’s forward prospects.
  • Here’s why the stock still looks like a buy for long-term investors interested in the fintech sector. 
SOFI stock - 2 Solid Reasons to Buy SoFi Technologies (SOFI) Stock Now

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SoFi Technologies (NASDAQ:SOFI) stock finds itself among many of the biggest underperformers this year, relative to the overall index. The fintech sector hasn’t performed well and SoFi has certainly felt this pain, declining more than 25% year-to-date at the time of writing.

The company’s focus on online banking and lending solutions has led to strong performance. However, SOFI stock has been volatile, and has not seen any sort of positive effects from various strong catalysts from the company of late.

That said, I remain bullish on this company, and here are the two key reasons why.

Positive Earnings and the SOFI Stock Outlook

SoFi recently released their excellent Q1 2024 results. The company reported 37% revenue increase and a positive net income. Although the stock remains 72% below its peak, SoFi’s growth potential goes beyond sales and earnings, making it a promising value stock to own in the long-term.

Sectors such as its Financial Services and Technology Platforms drove SoFi’s growth. It contributed 42% of its net revenue, shifting to a more balanced revenue mix. Moreover, the financial services division also achieved a record net sales of $151 million, with a profit of $37 million at a 25% margin.

Similarly, the Tech Platform division saw net sales of $94 million, up 21% year-over-year, with a 33% contribution margin, indicating effective acquisition and monetization strategies. All of this contributes to SoFi’s overall profitability.

As of March 31, personal loans consume 65% of the company’s loan book, but this could be shifting. Student loans surged 43% in Q1, while personal loans increased only by 11%. It might take a while for student loans to take up a larger share in SoFi’s loan sector. 

Growing 37% from 2023, SoFi has surpassed revenue estimates in previous quarters. In fact, the company achieved two consecutive quarters GAAP profitability. In Q1, it exceeded expectations with $645 million in sales and $88 million in net income, adding 622,000 new members. 

With raised FY 2024 forecasts, SoFi shows promise, trading at a 73% discount from its all-time high.

Strong Revenue Stream

Despite common assumptions, SoFi isn’t just a student loan company. In the Q1 2024 release, CEO Anthony Noto highlighted the company’s diverse growth across Financial Services and Tech Platform segments. Noto emphasized SoFi’s momentum, profitability, and balance sheet strength.

SoFi’s Financial Services and Tech Platform segments contributed 42% of its $581 million adjusted net revenue in Q1.

However, these segments need to enhance their profitability. In Q1, the Lending segment made up 75% of SoFi’s total contribution profit of $275.6 million. Yet, both segments have shown improved profitability compared to last year, with further improvements expected in the future.

In Q1 2024, SoFi’s loan originations totaled $4.37 billion, slightly higher than Q4 2023. Home loans surged 274% year-over-year to $336.1 million. Personal loans rose 2%, while student loans dropped 5% sequentially. 

SoFi earns double the interest rate on personal loans (13.8%) compared to student loans (5.6%). However, the personal loan default rate is 4.8%, significantly higher. Senior secured loans totaling $846 million may become a significant part of SoFi’s portfolio.


Investors should assess key risk factors before investing in any company, especially in financial institutions like SoFi. Monitoring how its loan book performs during economic downturns is crucial. Despite uncertain macro conditions, SoFi has shown strong financial results, including revenue, customer, and deposit growth. 

Moreover, the company is improving financially, with projected soaring net income in the coming years. With a current price-to-sales ratio of 3.1-times, below the company’s historical average of 4.2-times, SoFi stock presents an attractive investment opportunity, despite its inherent risks.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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