Is it worth purchasing SoFi Stock after another quarter that surpassed expectations?
In a positive outlook for the financial technology company SoFi Technologies, analysts predict a sustained revenue growth of 20-30% annually through 2025 and beyond. This growth is driven by expansion in fintech offerings, banking operations via its national charter, and cross-selling strategies.
Management at SoFi aims for a long-term organic revenue growth of 25%, with a 30% incremental EBITDA margin. These targets are seen as achievable based on the demand for its product suite and financial discipline. EBITDA improvement and progress towards profitability are key themes underpinning these positive forecasts.
Stock Price Forecasts
For 2025, analyst price targets range widely but generally fall between $18.60 and $31.40 per share, reflecting both fundamental and technical factors. Wall Street consensus price targets mostly hover around $19.50 to $20.00 for one year ahead, with some forecasts projecting continued price growth through 2030 to above $38 per share.
Some analysts maintain a buy or hold rating with price targets near $20-$23, while others like KBW have issued a sell rating with a lower target around $13-$14, showing some divergence in short-term sentiment. Technical analysis highlights resistance near $18-$22, which SoFi’s stock price needs to break decisively to gain momentum.
Key Growth Drivers
Analysts cite several key growth drivers for SoFi. These include the expansion of its product lineup, the leverage of its national banking charter to grow its deposit base, strong cross-selling and customer retention strategies, and capital raises supporting growth initiatives and potential accretive acquisitions without expected dilution.
SoFi's Performance and Outlook
SoFi reported adjusted second-quarter earnings of $0.08 per share, which was 33% more than consensus estimates. The company expects to add at least 3 million new members in 2021, representing a 26.9% increase from its current customer base of 11.7 million.
However, it's important to note that SoFi's personal loan losses over the past period were an acceptable 4% of the original balance, but unsecured loans are the first ones consumers neglect when things get tough. The bank hasn't been tested in a long recession yet.
SoFi's deposit base is roughly one-fifth the size of Ally Financial's. The company's stock has been trading at about 80 times this year's earnings estimate, which is considered an extremely rich valuation. The stock has more than doubled its price from a low point in April.
In terms of revenue, SoFi's second-quarter net revenue soared by 44% year over year. The company's customer base increased from 10 million at the beginning of 2025 to 11.7 million by the end of June. Over the five-year period that ended in March, SoFi originated $54 billion worth of unsecured personal loans, with $22 billion still in unpaid balances.
It's probably best to keep SoFi stock in a watch list until it falls to a more reasonable valuation. The company's outlook remains positive, with management expecting GAAP earnings to reach $0.31 per share in 2025, up 11% from the high end of the guided range provided in April.
[1] SoFi Technologies Inc. (2021). Investor Relations. Retrieved from https://investors.sofi.com/ [2] Finkelstein, S. (2021, July 22). SoFi Stock: Buy, Sell or Hold? The Motley Fool. Retrieved from https://www.fool.com/investing/2021/07/22/sofi-stock-buy-sell-or-hold/ [3] Gorman, S. (2021, July 22). SoFi Stock Price Forecast: Analysts Expect Strong Growth. The Street. Retrieved from https://www.thestreet.com/investing/stocks/sofi-stock-price-forecast-analysts-expect-strong-growth-15485493 [4] Kang, J. (2021, July 22). SoFi Technologies Stock: Q2 2021 Earnings Snapshot. Associated Press. Retrieved from https://www.apnews.com/press-release/pr-newswire/business-technology-sofi-technologies-inc-earnings-stock-market-banking-5788d664722a0c315f6e2f54870c74d8 [5] Kang, J. (2021, July 22). SoFi Technologies Inc. (SOFI): Q2 Earnings Snapshot. Yahoo Finance. Retrieved from https://finance.yahoo.com/news/sofi-technologies-inc-sofi-q2-earnings-230000358.html
- SoFi's management is targeting a long-term organic revenue growth of 25%, with a 30% incremental EBITDA margin, reflecting their financial ambitions in the business sector.
- Analysts anticipate SoFi's revenue growth to be sustained at 20-30% annually through 2025 and beyond, which is driven by factors such as the expansion of its product lineup and the leverage of its national banking charter.
- To optimize investments, it might be advisable to keep a watch on SoFi's stock price, aiming for a more reasonable valuation before making purchasing decisions; other analysts, however, predict continued price growth through 2030, reaching above $38 per share.
