SOFI Stock: This Fintech Rocket Just Delivered 139% Gains – Here’s the Hidden Risk

Fintech disruptor SOFI just posted numbers that’d make traditional banks blush—a 139% surge that’s got Wall Street buzzing. But before you FOMO into the trade, let’s crack open the hood.

The Bull Case: Why SOFI’s Eating Banks’ Lunch

Student loans? Check. Crypto trading? Check. A one-stop-shop for digital-native finance that’s stealing customers from legacy players. No wonder the stock’s mooning.

The Catch: Growth Isn’t Free

Those juicy returns came with a side of volatility—this isn’t your grandpa’s blue-chip stock. One earnings miss and those paper gains could evaporate faster than a meme coin’s liquidity.

The Bottom Line

SOFI’s proving fintech can punch above its weight. Just remember: in markets, what goes up 139% can sometimes round trip faster than a ‘stable’ coin losing its peg.

TLDR

• SoFi stock trades at $15.07, up 139% over the past year despite a 0.89% daily decline
• Stock appears overvalued with P/S ratio of 5.9 vs S&P 500’s 3.1, though revenue grew 25.9% to $2.8 billion
• Financial Services segment doubled revenue year-over-year and expects 60-65% growth this year
• Company raised 2025 guidance to $3.235-$3.31 billion revenue and $875-$895 million EBITDA
• Potential Fed rate cuts could boost lending demand, though stock showed poor performance during market downturns

SoFi stock closed at $15.07, down 0.89% in recent trading. The daily decline represents a minor pullback for shares that have surged 139% over the past year.

The fintech company has posted strong recent momentum. Shares gained 5.32% over five days and jumped 17.66% in the past month.

This upward movement comes partly from Chime’s successful IPO. The debut has lifted sentiment across the fintech space after a prolonged lull in public offerings.

Despite the rally, concerns about valuation are mounting. SoFi trades at a price-to-sales ratio of 5.9 compared to the S&P 500’s 3.1.

The company’s price-to-earnings ratio stands at 32.9, higher than the index’s 26.9. These metrics suggest the stock may be stretched relative to the broader market.

SoFi has delivered strong revenue growth to support some of the premium. Revenue expanded at an average annual rate of 36.2% over three years versus 5.5% for the S&P 500.

In the past 12 months, revenue grew 25.9% from $2.2 billion to $2.8 billion. The latest quarter saw revenue rise 31.7% to $772 million from $586 million a year earlier.

Financial Services Driving Growth

The Financial Services segment has become a key growth driver. This division doubled its revenue year-over-year in Q1 2025 and now accounts for 30.7% of total revenue.

Revenue from this segment grew from $436.5 million in 2023 to $821.5 million in 2024. The contribution margin improved to 49% in Q1 from 25% in 2024.

Management expects this segment’s revenue to grow 60-65% this year. The high-margin nature of this business has caught Wall Street’s attention.

Updated Guidance Reflects Confidence

SoFi raised its 2025 guidance during the recent quarter. The company now expects net revenue of $3.235 billion to $3.31 billion versus earlier guidance of $3.2 billion to $3.275 billion.

EBITDA guidance increased to $875 million to $895 million from a prior range of $845 million to $865 million. The company has beaten every revenue and EPS estimate over the past year.

These projections assume GDP growth of 1-2% and unemployment around 5%. Management also factors in about 1.5 rate cuts from the Federal Reserve.

Potential rate cuts could provide a boost to the lending business. The Lending segment currently makes up 55.5% of operating revenue at $1.5 billion.

Lower rates WOULD likely increase borrowing demand despite reducing net interest income. SoFi saw lending revenue jump from $480.9 million to $738.3 million between 2020 and 2021 during the ultra-low rate environment.

However, profitability concerns remain. Operating cash FLOW over the recent period was negative $1.8 billion, indicating a very poor margin of -65.6%.

The company’s balance sheet appears solid with $4.2 billion in cash against $3.1 billion in debt. This represents a moderate debt-to-equity ratio of 19.8%.

SoFi’s stock performance during market stress raises questions about resilience. Shares plunged 83.3% during the 2022 inflation shock versus a 25.4% drop for the S&P 500.

The stock has not returned to its pre-crisis high of $25.78. The post-crisis peak reached $18.03 in January 2025 before pulling back to current levels around $15.

Year-to-date performance remains relatively flat at 0.40% despite the strong annual gains. Six-month returns show a pullback of 4.26%.