SoFi Technologies (SOFI) Stock: Bargain Buy or Falling Knife? Analysts Weigh In

TLDR:

SoFi stock is down 57% from its peak and 29% year-to-date, despite solid business performance The company reached 10.1 million members with 785,000 new additions in Q4 2024 Q4 2024 saw adjusted net revenue increase 24% year-over-year and net income rise from $48M to $332M Non-lending revenue grew 52% year-over-year, now representing 49% of total adjusted net revenue Jefferies analyst John Hecht maintains a “Buy” rating ahead of Q1 2025 earnings release on April 29

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SoFi Technologies (SOFI) has experienced a steep 57% decline from its peak and is down 29% year-to-date, falling more dramatically than the broader market in 2025. This drop comes despite the fintech company posting strong growth metrics across key performance indicators.

SoFi Technologies, Inc. (SOFI)

The fintech challenger has been caught in the crossfire of market volatility. The broader S&P 500 index is down 10% this year and 14% from its peak, with recent tariff announcements from President Trump causing further market turbulence.

For long-term investors, this sell-off might present a buying opportunity. SoFi’s recent underperformance appears disconnected from its business fundamentals, with the stock suffering more due to its status as a younger, riskier company rather than operational issues.

Impressive Growth Trajectory

SoFi continues to show robust customer acquisition. In the fourth quarter of 2024, it added 785,000 new members, bringing its total to 10.1 million. For the full year 2024, SoFi added more than 2.8 million members, representing a 34% increase from the previous year.

Product adoption is growing even faster than membership. SoFi increased its products in use by more than 3.5 million in 2024, outpacing customer growth. This indicates successful cross-selling, with existing members adding more SoFi products as they engage with the platform.

The company’s financial performance reflects this growth. Adjusted net revenue increased 24% year-over-year in Q4 2024, while net income jumped from $48 million to $332 million.

CEO Anthony Noto has stated it’s “only a matter of time” before SoFi becomes a top 10 financial institution. The company’s easy-to-use app continues to attract new customers, especially among students and young professionals.

Evolving Business Model

One of SoFi’s strengths has been its ability to diversify away from its lending roots. Non-lending revenue increased 52% year-over-year in Q4 2024 and now accounts for 49% of total adjusted net revenue, up from 40% a year earlier.

Financial services products represented 89% of all product growth. This shift toward capital-light, fee-based services has helped maintain profitability despite economic volatility and rising interest rates.

SoFi’s deposit base appears stable. Currently, 90% of deposits come from direct deposit members, and more than half of new deposit accounts are funded by direct deposit within 30 days of opening.

As an online-only bank, SoFi operates without the burden of physical branches and legacy systems. This allows for greater innovation and efficiency compared to traditional banks.

Management credits much of the company’s success to investments in innovation and brand building. As SoFi continues developing its digital experience, it aims to capitalize on its upwardly mobile clientele whose financial needs will grow over time.

Market Sentiment and Analyst Views

Despite the stock price decline, some analysts remain bullish. Jefferies analyst John Hecht, ranked 527 out of more than 9,437 analysts tracked by TipRanks, maintains a “Buy” rating ahead of SoFi’s Q1 2025 earnings announcement on April 29.

Hecht points to several positive factors: rising loan volumes, stable credit trends, and strong access to funding. He expects SoFi to maintain its loan growth momentum in Q1, supported by two large forward flow deals: one with Fortress for $5.2 billion and another with Blue Owl for $5 billion.

Recent user data also supports optimism. SoFi’s monthly active users increased 22.6% year-over-year in February, indicating strong engagement and steady platform growth.

At current levels, SoFi stock trades at a forward 1-year P/E ratio of 24 and a price-to-sales ratio under 5. These valuations appear attractive for a high-growth company, though investors should recognize the inherent risks of newer financial technology firms.

Wall Street as a whole remains divided on SoFi’s prospects. The stock has a “Hold” consensus rating based on six Buys, six Holds, and four Sells assigned in the last three months. The average price target of $13.42 implies a 14.31% upside potential from current levels.

Investors will be watching closely when SoFi reports its Q1 2025 results next week. The numbers may provide clarity on whether the stock price decline represents a buying opportunity or if market concerns about economic headwinds are justified.

For those with some risk tolerance and a long-term investment horizon, the current price might offer an entry point into a company that’s reshaping the banking industry. However, potential investors should remember that SoFi remains vulnerable to interest rate movements and economic cycles.

The next earnings report will be crucial in determining whether SoFi can maintain its growth trajectory despite economic concerns, tariff uncertainties, and the risk of recession that have weighed on the stock in 2025 so far.

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