Hook and thesis
SoFi's recent quarterly print and guidance argue that the business is past its most fragile phase. The company delivered $1.0 billion in quarterly revenue, 38% year-over-year revenue growth, and turned profitable on an adjusted basis with $173.5 million in adjusted net income in Q4 2025. Yet the market is pricing the company at roughly $26.9 billion in market cap while sentiment and price action remain muted. That disconnect is the trade.
My thesis is simple: SoFi is a growth fintech that has proved it can scale revenue and convert to earnings while retaining attractive unit economics in lending, and that combination merits a mid-term multiple re-rate. The stock trades like a high-growth company that has yet to prove profitability; it has now proven both. If management hits guidance and the market recognizes the durability of growth, shares should move materially higher from current levels around $21.38.
What SoFi does and why the market should care
SoFi is a diversified financial-services platform with three primary revenue engines: Lending (personal, student and home loans and associated servicing), Technology Platform (payments and B2B technology revenue), and Financial Services (SoFi Money, SoFi Invest, credit card, and personal finance tools). The company's strategy is to use customer acquisition through low-cost digital channels and product bundling to monetize a larger lifetime value per member.
Why that matters: SoFi draws from large, underpenetrated consumer financial categories - refinancing, consumer credit, banking and payments - and it is showing the kind of unit economics investors expect from scale. The ability to grow customers, monetize with higher-margin financial services and maintain disciplined credit performance is a combination that justifies a premium multiple if the growth path is durable.
Supporting data - what the numbers say
Key reported and dataset-backed numbers:
- Revenue: $1.0 billion in Q4 2025, up 38% YoY (reported alongside the quarter).
- Profitability: Adjusted net income of $173.5 million in Q4 2025, up 184% YoY.
- Customer base: ~13.7 million customers reported in Q4 commentary, with expanding product penetration per customer.
- Market cap: roughly $26.9 billion (snapshot market cap figure).
- Current price: $21.38 per share (market snapshot).
- EPS: reported trailing figure $0.49 (ratios table), implying a P/E in the mid-40s at current price.
- Balance sheet and leverage: debt-to-equity approximately 0.31 and current ratio roughly 1.04 - not levered like a regional bank but still with leverage consistent with a lending franchise.
- Free cash flow: negative on the last reported basis (free cash flow -$3,169,693,000 in the ratios table) - a reminder that growth is still capital-intensive and the company recently raised capital ($1.5B disclosed in earnings commentary) to add optionality.
Valuation framing
At a market cap near $26.9 billion and a current share price around $21.38, SoFi trades at a trailing or near-term P/E roughly in the low-to-mid 40s using the available EPS figure of $0.49. Price-to-book is near 2.5-3.0 and reported EV is about $25.8 billion. On headline multiples the stock looks expensive versus mature banks, but cheap versus high-growth fintechs that can sustain mid-to-high-teens revenue growth and expanding margins.
Two ways to think about the valuation:
- As a bank-like multiple - it looks expensive. Traditional banks trade at low single-digit P/Es and lower P/TB. SoFi, given its growth, should not be shoehorned into that group.
- As a high-growth fintech - the current multiple is reasonable. Management's 2026 guidance (projected ~30% revenue growth and ~54% EPS growth for 2026, cited in earnings commentary) and the Q4 step-up make a mid-term multiple expansion plausible if growth continues and credit trends remain stable.
In short, the market has been treating SoFi like a binary growth story worth punishing on any micro setback. With profitability now visible, that binary should give way to steady re-rating as investors rotate back into durable growth names in financial services.
Catalysts (2-5)
- Reinforcing guidance and quarterly cadence - upcoming quarterly reports that show revenue and EPS growth consistent with or above management guidance will remove a major overhang and speed re-rating.
- Product launches and international payments expansion - new revenue streams from business banking and the cross-border payment pilot in Mexico could accelerate non-lending revenue and improve blended margins.
- Capital deployment clarity - management raised $1.5 billion even without immediate funding needs. Clear, accretive capital allocation (buybacks, M&A or investment in high-return product launches) would be viewed favorably.
- Macro stability in consumer credit - stable or improving credit performance would make investors comfortable that lending returns will remain attractive through the cycle.
Trade plan - actionable entry, stop and targets
Trade direction: Long. Risk level: Medium.
Entry: $21.00. This is a slightly conservative entry below the current price to allow for a small pullback and better risk/reward.
Stop loss: $17.50. A drop below this level would imply renewed selling pressure and potential re-acceleration of the downtrend; the stop protects capital against a deeper technical unwind.
Target: $28.00. This target assumes a multiple expansion as the market rewards durable 30%+ revenue growth and EPS expansion; $28 is achievable with a re-rating toward mid-20s P/E on improving earnings or continued top-line outperformance.
Horizon: mid term (45 trading days). Expect the trade to play out over approximately 45 trading days because re-ratings in financials require at least one or two reporting cycles and time for institutional recognition. If catalysts accelerate (better-than-expected quarterly results, positive guidance, or visible accretive capital deployment), the position can be re-evaluated for faster profit-taking or scale-up.
Position sizing note: Treat as a tactical mid-sized position (e.g., 2-4% of portfolio depending on risk tolerance), given the company's sizeable float (~1.237 billion shares) and volatile trading profile.
Risks and counterarguments
Below are the main risks that could invalidate the thesis, and at least one counterargument to my bullish view.
- Credit deterioration: A material worsening in consumer credit or a recessionary shock would hurt SoFi's lending margins and increase provisions, quickly reversing profitability gains.
- Capital allocation missteps: The $1.5 billion capital raise is a double-edged sword. If management deploys the proceeds into large, unprofitable M&A or excessive share issuance, returns could be impaired and multiples compressed.
- Interest rate environment: Rapidly rising rates without commensurate asset repricing could compress net interest margins for certain lending products and erode near-term earnings.
- Execution on non-lending products: Growth of higher-margin financial services (payments, banking, invest) is central to the valuation case. Slow uptake or poor unit economics on new product launches would slow margin expansion.
- Valuation re-risk: The stock already trades at a P/E in the mid-40s on reported EPS. If the market decides to re-rate fintechs lower or rotates out of growth, upside will be limited even with good operational performance.
Counterargument
One reasonable counterargument is that the market is correctly pricing in execution risk. Management has been aggressive in pursuing scale, and negative free cash flow and a recent capital raise signal that SoFi still needs capital to fuel growth. If that growth fails to convert to consistent, sustainable free cash flow, a re-rate will not happen and the stock may stagnate or decline further. In other words, profitability in a single quarter does not guarantee sustained margin improvement.
Conclusion and what would change my mind
SoFi is a mid-cap fintech with a mix of bank-like and fintech characteristics. The company has demonstrated it can grow revenue near 30-40% and convert to adjusted profitability, creating a credible path for multiple expansion. At a market cap near $26.9 billion and a current price around $21.38, the market is offering an asymmetric opportunity: if SoFi executes, the multiple should re-rate and shares will materially outperform; if it stumbles, downside is contained by the stop loss defined above.
What would change my mind: evidence of sustained earnings disappointment (several quarters of weakening revenue or margins), materially worse credit losses, or clearly dilutive capital deployment would all cause me to abandon the bullish stance. Conversely, repeated beats on revenue and EPS and visible margin expansion would justify adding to the position and shifting the horizon toward long term (180 trading days).
Actionable summary: Initiate a mid-term long at $21.00, stop $17.50, target $28.00, horizon mid term (45 trading days). Monitor quarterly results, credit trends and capital deployment decisions closely - these will determine whether the market finally recognizes SoFi's earnings trajectory.
Key milestones to watch in the next 45 trading days:
- Next earnings or investor updates confirming 2026 guidance and showing sequential margin improvement.
- Announcements on product rollouts (business banking, payments expansion) and early monetization metrics.
- Any material use of the recently raised $1.5 billion - buybacks, M&A or product investment.