Why Buy SoFi Technologies Stock Now?
The stock price of SoFi Technologies (NASDAQ:SOFI) is up 60% this year, largely thanks to the company’s announcement about new crypto investment offerings. This leads to a key question: is the stock still a buy? We believe it is. While the current price of around $23 might seem risky from a valuation perspective, our analysis suggests there is minimal cause for concern.
We came to this conclusion by comparing SoFi’s current valuation to its recent operating performance and financial health. Our analysis of SoFi Technologies, based on key metrics like Growth, Profitability, Financial Stability, and Downturn Resilience, indicates the company has a strong operational and financial foundation.
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 – SoundHound AI: SOUN Stock To $2?
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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 very expensive compared to the broader market.
- SoFi Technologies has a price-to-sales (P/S) ratio of 8.3 vs. a figure of 3.2 for the S&P 500
- And, it has a price-to-earnings (P/E) ratio of 44.9 vs. the benchmark’s 23.7
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 35.0% over the last 3 years (vs. increase of 6.1% for S&P 500)
- Its revenues have grown 31.5% from $2.3 Bil to $3.1 Bil in the last 12 months (vs. growth of 5.0% for S&P 500)
- Also, its quarterly revenues grew 42.8% to $855 Mil in the most recent quarter from $599 Mil a year ago (vs. 4.8% 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 strong Net Income Margin of 18.4% (vs. 12.7% for S&P 500)
Is SoFi Technologies Financially Stable?
SoFi’s balance sheet appears solid.
- As of the latest quarter, debt stood at $4.0 billion against a market cap of $27 billion, implying a strong Debt-to-Equity Ratio of 15% (vs. 19.4% for the S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
- Cash and equivalents total $5.1 billion, representing a strong Cash-to-Assets Ratio of 12% out of $41 billion in total assets (vs. 6.8% 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.
Tariffs Imposition (2025)
- SOFI stock fell 47% from a high of $18 on January 24 2025 to $9.50 on April 8 2025, vs. a peak-to-trough decline of 19% for the S&P 500
- The stock recovered to pre-crisis high on June 30.
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 24.23 on 18 August 2025 and currently trades at around $23
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: Very Strong
- Profitability: Strong
- Financial Stability: Strong
- Downturn Resilience: Very Weak
- Overall: Strong
The Verdict
SoFi stock has demonstrated strong performance across key metrics. While its valuation of 8 times revenue may seem high compared to the S&P 500, this premium is justified by the company’s robust growth. Over the last three years, SoFi’s revenue has grown at an average annual rate of 35%, significantly outpacing the S&P 500’s 6%.
This growth trajectory is expected to continue, with revenues projected to increase by an average of 25% annually over the next three years, which helps support the current valuation. Additionally, a decline in interest rates would further boost SoFi’s business. For a more detailed look at the company’s potential, we’ve conducted a separate analysis on upside potential that projects a target price of around $33 per share.
Of course, we could be wrong in our assessment. There is a risk that investors may not be willing to pay such a high premium—especially given the stock’s history of significant declines during economic downturns. Still, we believe that for risk-tolerant investors with a three- to five-year investment horizon, SoFi remains a compelling buy despite its high valuation.
While SOFI stock looks promising, 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 its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. 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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