Key Points
It took years for Wall Street to appreciate SoFi Technologies' growth potential.
This fintech stock trades at a rich valuation, but it still has plenty more room to run.
SoFi remains poised for continued outsized earnings growth, which will likely translate into further market-beating appreciation.
For several years, SoFi Technologies (NASDAQ: SOFI) was out of favor among investors. Skepticism ran high about whether this company could live up to the grand vision touted by SoFi's chief executive officer, Anthony Noto. During the past year, however, Wall Street has warmed up in a big way toward this fintech stock.
Currently ranking as the 56th largest bank in America, SoFi still has a long way to go before it becomes a top-10 bank in the U.S., which Noto has noted as being one of the company's long-term goals. However, SoFi is now consistently profitable. As membership and transaction volume growth persist, the company remains poised to stay a Wall Street darling.
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Hence, concerns about SoFi's shares topping out anytime soon may be overblown. Instead, this stock's recent megarally may have more runway in the months and quarters ahead.
It's been a banner year for SoFi Technologies
SoFi went public in 2021, which in hindsight was unfortunate timing. Not too long after its debut, the shares fell alongside other speculative growth stocks, as investors prioritized profitability over high revenue growth. The stock's underperformance persisted through 2022, 2023, and for most of 2024.
Despite SoFi continuing to report high levels of revenue growth, investors were more concerned about when, and if, the company would become profitable. Starting in late 2024, however, SoFi Technologies began regularly reporting positive earnings. In turn, this has led to a rally that has persisted -- largely thanks to SoFi continuing to report strong quarterly results.
For instance, during second-quarter 2025, SoFi Technologies reported strong year-over-year growth across multiple metrics, including a 34% increase in product growth, and a 44% increase in net revenue growth. Thanks to SoFi's fixed costs and thus high degree of operating leverage, this moderately high revenue growth translated into outsized levels of earnings growth.
During the quarter, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increased by more than 70% from the prior year's quarter, from $138 million to $239 million. Net income increased from $8 million to more than $97 million, while earnings per share shot from $0.01 to $0.08 cents per share .
Much suggests high growth will persist
After surging more than 238% during the past 12 months, SoFi's stock has now reached a valuation better reflective of its future growth prospects. Currently, the shares trade at a forward price-to-earnings (P/E) ratio of about 47. That's well above other major fintech stocks, like Block (NYSE: XYZ) and PayPal (NASDAQ: PYPL), which trade at forward P/E ratios of 21 and 12, respectively.
With this premium valuation, SoFi Technologies could be at risk of a big price correction, if the company experiences any sort of growth hiccup or setback. However, while that's possible, much suggests that high growth will continue. This is largely due to the company's success in cross-selling services.
In the latest reported quarter, a 52% year-over-year increase in financial services revenue contributed greatly to total net revenue growth . Customers introduced to SoFi through its banking and lending businesses have become customers of higher-margin businesses like SoFi's brokerage platform.
That's not all. Recently, the federal government has considered a further privatization of the student lending market. This could boost demand for SoFi's student lending services, in turn adding new customers and creating new cross-selling opportunities.
Should you buy SoFi today?
In the long term, SoFi's focus on capturing affluent millennial and Gen Z customers could enable it to meet its goal of becoming a top-10 bank. With big banks valued in the hundreds of billions, all while SoFi has a market cap of just $34 billion , the shares clearly have considerably more room to grow from here.
Although the stock is likely to remain volatile, until quarterly results begin to suggest otherwise, consider it still worthwhile to make a long-term bet on this up-and-coming financial supermarket.
Should you invest $1,000 in SoFi Technologies right now?
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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Block and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short December 2025 $75 calls on PayPal. The Motley Fool has a disclosure policy.
