Should You Buy SoFi Technologies Stock?

SoFi Technologies stock (NASDAQ:SOFI) jumped 7% in pre-market trading following the release of strong Q2 earnings. The company reported earnings of $0.08 per share on revenue of $855 million, significantly exceeding Wall Street’s estimates of $0.06 per share and $804 million, respectively. Adding to the positive news, SoFi raised its full-year 2025 outlook. Management now anticipates adjusted net revenue of approximately $3.375 billion, suggesting about 30% annual growth (up from the previous guidance of 24% to 27%). Additionally, GAAP EPS is projected to be around $0.31 per share, an increase from the prior estimate of $0.27 to $0.28 per share.

In fact, in our previous analysis, we highlighted SoFi’s historical tendency to show positive stock returns after earnings announcements. However, the crucial question now is whether the stock is a buy at its current level of $22. We believe SOFI stock appears risky due to its very high current valuation.

This conclusion is based on a comparison of SoFi’s current valuation against its recent operating performance and its current and historical financial condition. Our detailed analysis of SoFi Technologies, encompassing key parameters like Growth, Profitability, Financial Stability, and Downturn Resilience, indicates that the company has a moderate overall operating performance and financial condition.

However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – Celcuity: What’s Happening With CELC Stock?

Image by Kevin Schneider from Pixabay

How Does SoFi Technologies’ Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, SOFI stock looks expensive compared to the broader market.

• SoFi Technologies has a price-to-sales (P/S) ratio of 8.7 vs. a figure of 3.0 for the S&P 500
• And, it has a price-to-earnings (P/E) ratio of 46.8 vs. the benchmark’s 22.7

How Have SoFi Technologies’ Revenues Grown Over Recent Years?

SoFi Technologies’ Revenues have grown considerably over recent years.

• SoFi Technologies has seen its top line grow at an average rate of 36.2% over the last 3 years (vs. increase of 5.3% for S&P 500)
• Also, its quarterly revenues grew 43% to $855 Mil in the most recent quarter from $599 Mil a year ago (vs. 4.5% improvement for S&P 500)

How Profitable Is SoFi Technologies?

SoFi Technologies’ profit margins are around the median level for companies in the Trefis coverage universe.

• For the last four-quarter period, SoFi Technologies’ Net Income was $562 Mil – indicating a good Net Income Margin of 18.4% (vs. 11.9% for S&P 500)

How Resilient Is SOFI Stock During A Downturn?

SOFI stock has fared much worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• SOFI stock fell 83.3% from a high of $25.78 on 1 February 2021 to $4.30 on 7 December 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
•  The highest the stock has reached since then is 22.09 on 17 July 2025 and currently trades at around $21

Putting All The Pieces Together: What It Means For SOFI Stock

In summary, SoFi Technologies’ performance across the parameters detailed above are as follows:

• Growth: Extremely Strong
• Profitability: Strong
• Downturn Resilience: Extremely Weak
• Overall: Neutral

While SoFi has shown moderate performance in the previously mentioned areas, its current valuation poses a significant risk, making it a less attractive investment in our view. We acknowledge that our assessment could be conservative, and investors might be willing to pay a premium for SoFi given its strong revenue growth. (We’ve explored a potential upside scenario for SoFi in a separate analysis.)

However, SoFi stock is currently trading at nearly 9 times its trailing revenues, which is considerably higher than its three-year average of 4.5 times. Furthermore, the stock has experienced dramatic declines during unfavorable market conditions. This historical volatility, combined with its elevated valuation, suggests a high degree of risk for SoFi at its current price levels.

Overall, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, 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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