SoFi’s Breakout Continues: Crypto And Rate Cuts Fuel Further Upside

August 13th, 2025 by Trefis Team
SOFI: SoFi Technologies logo
SOFI
SoFi Technologies

Just last month, we discussed how SoFi stock could climb toward $30 levels. Fast-forward a few weeks, and the stock is already trading close to $24 – a remarkable 2.5x surge from its April lows of under $10. While crypto trading announcements initially sparked this rally, recent developments suggest this momentum could have more legs.

That being said, if you’re looking for an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P Midcap indexes—and has achieved returns exceeding 91% since its inception. Separately, see – Ethereum: ETH Price To $10,000?

Image by 3D Animation Production Company from Pixabay

The Interest Rate Tailwind

The latest economic data is painting an increasingly favorable picture for SoFi. The Consumer Price Index rose just 0.2% last month, down from June’s 0.3% increase, according to the Labor Department’s Bureau of Labor Statistics report on August 12, 2025. This cooling inflation data puts the Federal Reserve one step closer to cutting rates in September, with market probability for a rate cut now very high. [1]

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How Rate Cuts Benefit SoFi

Rate cuts create multiple tailwinds for SoFi’s business model. The biggest impact is on the lending segment. Lower rates reduce SoFi’s funding costs while potentially increasing loan demand as borrowing becomes more affordable for consumers. This creates a favorable environment for loan origination growth, which is crucial since lending remains SoFi’s largest revenue segment. Additionally, lower rates could reignite growth in student loan refinancing and personal loans, two key areas where SoFi has historically excelled. See our detailed analysis on SoFi’s revenue comparison.

Potential Headwinds to Watch

Despite the positive momentum, several risks could derail this rally:

  • Execution Risk on Crypto Launch: While the crypto announcement drove initial excitement, SoFi still needs to successfully launch and scale these services. Any delays or technical issues could disappoint investors who’ve already priced in success.
  • Competitive Pressure: The fintech space remains intensely competitive, with both traditional banks and innovative startups fighting for market share. Key competitors include Marcus by Goldman Sachs, LendingClub, Upstart, Avant, and Prosper in lending, while digital banking rivals like Chime, Varo, Axos, and Ally compete for customers. SoFi needs to differentiate itself in this increasingly crowded market. Also, see our take on – What Lies Ahead For Chime Stock?
  • Economic Uncertainty: If the economy weakens more than expected, loan defaults could rise, impacting SoFi’s credit quality and profitability. The company’s lending focus makes it particularly sensitive to economic cycles. Additionally, SoFi stock has historically underperformed the broader markets during economic downturns, amplifying losses during market stress periods. Our dashboard on buy or fear SoFi stock has more details on this performance pattern.
  • Valuation Concerns: With the stock up 150% from its lows, some investors may view current levels as stretched, especially if growth fails to meet elevated expectations. SoFi now trades at 8.1x trailing revenues – nearly double its three-year average of 4.4x. While fintech revenue multiples have risen lately, industry-wide, SoFi’s premium valuation leaves little room for execution missteps.

The Rally May Have More Room

The convergence of two powerful catalysts – crypto platform expansion and potential for falling interest rates – creates a compelling setup for continued gains. Digital lending firms like SoFi are positioned to benefit significantly from rate cuts, while the crypto offering adds an entirely new revenue stream that wasn’t factored into previous growth projections.

The timing couldn’t be better. As interest rates decline, SoFi’s core lending business should see improved margins and increased demand. Simultaneously, the crypto platform launch taps into a high-growth market segment that generated hundreds of millions for competitors like Robinhood.

While risks remain, the fundamental drivers suggest this rally could continue building momentum. Investors who missed the initial move from $10 may still find opportunity, though they should remain mindful of the high valuation, execution risks, and competitive challenges ahead. See, there always remains a meaningful risk when investing in a single, or just a handful, of stocks. Consider Trefis High Quality (HQ) Portfolio, which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

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Notes:
  1. Investors double down on September Fed cut after CPI, Davide Barbuscia, Reuters, Aug 13, 2025 [↩]