SoFi (SOFI), which outperformed the market for two consecutive years, is in the red this year and is underperforming the S&P 500 Index ($SPX). The stock lost more than 10% of its value over the last month after its 2025 earnings guidance spooked investors. In this article, we’ll discuss whether it makes sense to buy SoFi stock after the recent dip.
Here’s Why SoFi’s 2025 Guidance Fell Short of Estimates
SoFi forecast 2025 earnings per share (EPS) between $0.25-$0.27, which was a tad short of consensus estimates. According to CEO Anthony Noto, SoFi’s 2025 EPS guidance came in below Street estimates as the company is investing to grow its earnings in the long term and not just focusing on short-term profitability. He said that these investments would help SoFi deliver 20% annual revenue growth in the foreseeable future.
Noto said that fee-based revenue – which rose 63% year-over-year in Q4 and accounted for 40% of the company’s revenues – would drive its growth going forward.
SoFi Is Growing at a Brisk Pace
SoFi has been growing steadily led by the continued rise in its member count. Its member base rose 34% year-over-year and it had over 10 million members at the end of 2024. The company’s member growth has been stellar and the number has grown 10-fold over the last 5 years. The rising member base opens up significant cross-sell and upsell opportunities for SoFi. For instance, last year, 40% of its new members opened a new product within 30 days of signing up.
While SoFi is focusing on the Technology and Financial Services businesses, its Lending business has also done much better than feared. Last year, its lending revenues rose 11%, well ahead of its guidance. The company managed to grow its lending business without taking undue credit risk and its delinquency rate improved gradually during the year after peaking in the first quarter of 2024.
The company has also been originating loans for third parties under what it calls the loan platform business (LPB), and last year, it originated $2.1 billion through this route. Through such originations, SoFi can serve customers it would not have otherwise lent to. In the process, it not only keeps the risk-free fee-based income, but also has the opportunity to cross-sell other products to these customers over time.
SoFi’s Growth Could Accelerate in 2026
SoFi expects its growth to accelerate in 2026. The U.S. Department of Treasury selected the company for Direct Express, a prepaid debit card program used by around 3.4 million people receiving federal benefits. The integration will happen in 2025, but the company expects to realize its financial benefits only next year.
Similarly, SoFi partnered with a big financial services company based in the U.S. to integrate its technology. SoFi expects this unnamed company to become among its top 10 clients by revenues in 2026 when it fully transitions to its platform.
SoFi said that it now expects its topline growth until 2026 to grow above the midpoint of its previous range of between 20%-25% while sounding confident about the EPS guidance of between $0.55-$0.80 in 2026. Moreover, the company reiterated its previous forecast of delivering annual EPS growth of 20%-25% beyond 2026.
Noto perhaps best summed up SoFi’s outlook during the Q4 earnings call, saying, “The operating environment is the strongest it has been since I joined with lower interest rates, strong employment, active capital markets, and we have a vibrant brand and the only digital one-stop shop offering in the U.S.”
Over the long term, SoFi is targeting adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin of 30% and a net income margin of 20%. It is also working towards a “very high ROE (return on equity) well above other financial institutions.”
SoFi Stock Forecast
Sell-side analysts are not too bullish on SoFi and it has a consensus rating of “Hold” from the 18 analysts actively covering the stock. The stock’s mean target price of $13.89 is below current price levels while its Street-high target price of $20 (via Needham) is 38% higher than Feb. 26 closing prices.
Here it is worth noting that brokerages haven’t been sold on SoFi’s outlook for quite some time even as the stock rose 124% over the last 2 years. While SoFi has been growing at a brisk pace, its valuations have been a breaking point for some analysts.
To be sure, SoFi appears overvalued. Its tangible book value at the end of 2024 was just $4.47 per share. I would, however, argue that the price-to-book multiple might not be the perfect metric to value SoFi, given the company’s pivot to non-asset-based income.
Multiples based on near-term earnings don’t look reassuring either, and a forward price-earnings (P/E) multiple of 55x would appear elevated especially when compared to other financial companies. However, SoFi brings strong profitable growth to the table and guided for an EPS between $0.55-$0.80 for 2026. The company has been quite conservative with its guidance and mostly met or exceeded the forecasts over the last couple of years.
Overall, for someone looking to take a long-term view, SoFi’s valuations won’t look all that frothy at a 2026 P/E of just above 21x based on the midpoint of its guidance.
