SoFi Stock Skyrockets 88% in 3 Months: Too Late to Get in?
Image Source: Zacks Investment Research
SOFI is well-positioned to benefit from shifting federal student loan policies that limit forgiveness options. As the Trump administration enacts stricter criteria, more borrowers may seek private refinancing to manage repayment, creating a growth opportunity for SoFi. The company's digital-first platform, competitive rates and flexible terms appeal to borrowers navigating reduced federal relief. This environment has already driven a 59% year-over-year surge in student loan origination volume in the first quarter of 2025, signaling renewed demand. With borrowers increasingly seeking alternatives, SoFi's refinancing business could gain further momentum, translating into stronger revenue growth and enhanced positioning within the broader financial services sector.
SoFi's land-and-expand strategy remains a core strength, provided it is effectively managed. The company has a strong track record of executing this ambitious growth approach. By offering a diverse range of financial services, SoFi attracts a growing customer base. This, in turn, incentivizes more partners to integrate their offerings within SoFi's expanding ecosystem. The result is a robust cross-selling dynamic that enhances overall profitability.
Given this, it is unsurprising that management maintains an aggressive revenue growth outlook for 2025. SOFI's increasing ability to cross-sell financial products is expected to drive significant EPS expansion, which is crucial for long-term shareholder value creation. Even in a conservative scenario, management projects a 24% to 27% revenue increase, with EPS surging 80% to 87%. This substantial discrepancy between revenue growth and bottom-line expansion underscores SoFi's ability to leverage economies of scale.
Galileo, SoFi's B2B financial services platform, is a pivotal growth driver. By enabling seamless payment and lending integrations, it positions SoFi as a leading player in the embedded finance market. This sector is projected to witness a robust 16.8% CAGR through 2029, fueled by increasing demand for integrated financial solutions. Galileo's ability to attract high-profile clients and diversify SoFi's revenue streams strengthens the company's long-term outlook. The platform's adoption by other financial firms further solidifies SoFi's market position and enhances its ability to capture additional market share.
SoFi's financials reinforce its bullish long-term thesis. In the first quarter of 2025, the company achieved a 20% year-over-year increase in net sales, with a remarkable 217% surge in net income. This impressive profitability growth highlights SoFi's strong operating leverage, driven by its ability to scale efficiently. The addition of 800,000 new members in the quarter — the highest absolute increase recorded — enhances the company's cross-selling potential while reducing customer acquisition costs.
All three business segments contributed to revenue growth in the first quarter. Lending and Technology Platform revenues grew 25% and 10% year over year, respectively, while the Financial Services segment surged an impressive 101%.
The Zacks Consensus Estimate for SOFI's 2025 earnings stands at 27 cents per share, indicating a substantial 80% year-over-year increase. Similarly, projected revenues for 2025 are estimated to be $3.29 billion, marking a 26.2% increase from the previous year.
Image Source: Zacks Investment Research
Despite its strong fundamentals, SoFi faces notable challenges. As a financial services company, its performance is highly sensitive to macroeconomic conditions, particularly Federal Reserve policy and the overall health of the U.S. economy. With the possibility of prolonged high interest rates and recessionary risks linked to Trump's tariff hikes, the environment remains uncertain.
Competition also remains a critical concern. SoFi may benefit from a first-mover advantage in the U.S. fintech space, but it faces formidable pressure from established banking powerhouses such as JPMorgan JPM and Bank of America BAC. These institutions not only bring decades of customer trust and regulatory experience but are also rapidly expanding their digital capabilities to counter fintech disruptors. JPMorgan has been actively investing in digital banking infrastructure, while Bank of America continues to enhance its mobile and AI-driven services to retain tech-savvy consumers. As SoFi scales, competing with legacy giants like JPMorgan and Bank of America — alongside agile fintechs like Revolut, which is now pursuing a U.S. banking license — will remain a defining test of its long-term resilience.
SOFI appears overvalued compared to its industry peers following the recent surge in its stock price. The company's forward 12-month Price/Earnings (P/E) ratio is 47.48, more than double the industry average of 20.35. This elevated valuation suggests that investors are pricing in aggressive growth expectations, which may not be fully supported by current fundamentals. While market enthusiasm can drive short-term gains, such a high premium relative to peers raises questions about sustainability.
Given SoFi's strong growth trajectory, expanding ecosystem, and improving financial performance, the long-term investment case remains compelling. However, considering macroeconomic uncertainties and the stock's relatively high valuation, a prudent approach would be to adopt a hold strategy at current levels. Investors may consider waiting for further price corrections before adding positions, ensuring a more attractive entry point while mitigating downside risks. A wait-and-see approach will allow investors to reassess valuation levels and economic conditions before making new commitments to the stock.
SOFI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Bank of America Corporation (BAC) : Free Stock Analysis Report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
SoFi Technologies, Inc. (SOFI) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Wall Street Journal
12 minutes ago
- Wall Street Journal
‘Tariff Man' Is Back for More ‘Liberation'
President Trump sure knows how to spoil an economic mood. Three days after he signed the GOP's big budget bill, saving the economy from a scheduled $4.5 trillion tax increase, Mr. Trump was back playing the role of Tariff Man. On Monday he announced 25% tariffs on Japan and South Korea, while adding to renewed will-he-or-won't-he uncertainty for the U.S. economy and trading partners. In letters to Japan's Prime Minister and South Korea's President, Mr. Trump huffs and puffs again about bilateral trade deficits, which he mistakenly thinks are a sign of foreign exploitation. 'We must move away from these longterm, and very persistent, Trade Deficits,' he says. Hence the new 25% tariffs, starting Aug. 1. This nearly matches Mr. Trump's paused 'Liberation Day' duties on the two countries, except Japan was supposed to get only 24%. Later in the day he sent tariff letters to a dozen other, less economically significant, countries.
Yahoo
17 minutes ago
- Yahoo
Social Security sends incorrect email saying ‘Big Beautiful Bill' ends taxes on benefits—here's what is actually changing
The Social Security Administration sent a misleading email to benefit recipients and other Americans last week about the Republican budget bill that was recently signed into law by President Donald Trump. Advocates are now trying to correct the record to ensure beneficiaries know how the legislation could affect their tax bill. On July 3, Social Security sent an email and posted a press release saying that 'the new law includes a provision that eliminates federal income taxes on Social Security benefits for most beneficiaries.' It also says 'nearly 90%' of beneficiaries will no longer pay federal income taxes on the benefit. While eliminating taxes on Social Security had been proposed by Republican politicians, that provision was ultimately taken out of the version of the so-called 'One Big Beautiful Bill' that became law because it violated Senate rules. Instead, the law allows Americans aged 65 or older to take an additional $6,000 income tax deduction. Notably, this does not include beneficiaries who are aged 62 to 64. The agency updated the press release Monday to note the deduction after outcry and media coverage. The difference could confuse beneficiaries, according to National Committee to Preserve Social Security and Medicare, a non-profit advocating to preserve and strengthen Social Security and Medicare. The group also notes that the political messaging behind the email—it heralds the 'landmark' legislation—is 'unprecedented' for the SSA, which is supposed to be a neutral agency managing the benefits of some 73 million Americans. SSA did not immediately respond to Fortune's request for comment. Trump made a point of promising to end taxation on Social Security benefits on the campaign trail. As Republican politicians worked to put their budget bill together, many promised to include the provision. But in order to pass the legislation using a process called reconciliation, it was determined that the GOP could not include a provision on Social Security taxes. Instead, they substituted in the higher deduction for older Americans. The legislation signed into law last week does, however, include a provision that allows Americans aged 65 and older to deduct an additional $6,000 on their federal income taxes, in addition to the standard deduction, which is already bigger for seniors than it is for younger Americans. Those who itemize also qualify for it. For married couples, both spouses can take the deduction if they are both over 65, for a total of $12,000 extra. Like other provisions in the bill, it is time limited: It is in effect only for the 2025 to 2028 tax seasons. It also applies to those earning a modified adjusted gross income up to $75,000, or double that for married couples. It then begins to phase out for incomes above that threshold, and is not available to individuals earning $175,000, or couples earning $250,000. According to the White House, this provision will increase the share of seniors receiving Social Security who will not pay income tax on their benefits from 64% to 88%. The poorest seniors won't benefit from the break, because they already do not pay Social Security taxes (the White House's own analysis notes 64% already do not)—nor the richest, given the income phaseout. Instead, it is upper-middle class seniors who stand to benefit for the next few years. Those with incomes below $63,300 pay about 1% or less of their benefits, on average, in taxes, according to the non-partisan Center on Budget and Policy Priorities. Additionally, this portion of the bill actually hastens the program's insolvency, a concern for many Americans, because the taxes seniors pay on the benefits go back into the Social Security and Medicare trust funds for future generations. In fact, the Committee for a Responsible Federal Budget (CRFB) estimates the provision would bring the trust fund to insolvency one year sooner than current calculations. Once that happens, Social Security beneficiaries would face an across-the-board benefit cut of around 24%, CRFB says. Other provisions in the bill are also expected to disproportionately affect older Americans. For example, it changes eligibility for and cuts federal funding for the Supplemental Nutrition Assistance Program (SNAP) starting in 2027, which 11 million adults aged 50 and older rely on, according to AARP. New work requirements on Medicaid could also prevent some older Americans from receiving benefits. Social Security has become a lightening rod for controversy since Trump's inauguration in January. The agency was an early target of the administration's so-called Department of Government Efficiency under Elon Musk, which has worried advocates who say it is becoming overly-politicized. This story was originally featured on
Yahoo
21 minutes ago
- Yahoo
Attention, Nvidia Shareholders: 1 Crucial Thing to Watch in the Second Half
Nvidia, after early headwinds, finished the first half of the year with a gain. The company reached a new milestone in recent days, one that could set the tone for share performance in the second half. 10 stocks we like better than Nvidia › The first half was a bit of a roller coaster ride for Nvidia (NASDAQ: NVDA) shareholders. The stock slid almost 30% from the start of the year to early April amid a variety of concerns -- from the future of artificial intelligence (AI) spending to worries that President Trump's import tariffs would weigh on the economy and corporate earnings. Meanwhile, the company continued to launch its new Blackwell platform and delivered double-digit quarterly revenue growth. The message for future prospects is bright too, with Nvidia speaking of soaring demand in the area of AI inference and launching projects abroad such as the building of AI infrastructure in Abu Dhabi. All of this, along with an easing of international trade tensions, prompted investors to return to growth stocks, and one of their top picks has been Nvidia -- the stock finished the first half with a 17% gain. Now, as we head into the second half of the year, you may be wondering how Nvidia will fare -- here's one crucial element to watch. Nvidia has built an amazing success story over the years, transforming itself from a company that mainly served the video gaming market to one that's at the center of one of today's highest growth industries. The graphic processing unit (GPU) still is integral to video games, but Nvidia -- thanks to sales of GPUs and related products and services -- today generates most of its revenue from AI customers. For example, in the latest quarter, data center revenue made up 88% of total revenue. This AI giant entered the AI market in its earliest days and aggressively built an empire. Today, selling the world's top-performing GPUs, Nvidia dominates the AI chip market and has pledged to update its chips -- and often complete architecture -- on an annual basis. It launched this annual rhythm with the Blackwell architecture and chip in the fourth quarter of last year -- the rollout went smoothly, Nvidia maintained gross margin in its forecast range, and Blackwell delivered $11 billion in revenue during its first quarter of commercialization. That represented a successful start to this fast-paced innovation plan, and this brings me to the point to watch now -- a new milestone for Nvidia -- as the second half begins. Nvidia's next launch is Blackwell Ultra, and it's already started as cloud player CoreWeave just announced the availability of the platform. CoreWeave now is offering customers access to GB300 NVL72, a system that's a step up from the original Blackwell and a leap from the Hopper architecture -- that was the main Nvidia architecture in use before the original Blackwell launch this winter. GB300 NVL72 may provide a fiftyfold jump in output for reasoning model inference compared to Hopper. Now, the point to watch is this Blackwell Ultra rollout, with special attention to demand and whether the process is smooth or not. And once earnings season rolls around, it will be important to look at sales figures as well as gross margin. If this latest update mirrors the Blackwell launch, investors may have something to cheer about -- and we'll have reason to be optimistic about the next chip launches too. Nvidia will have proved its ability to successfully handle frequent chip releases and maintain strong growth and profitability on sales. If there's a glitch along the way or if Nvidia misses a financial goal, then it will be important to dig deeper and examine whether this was just a one-time problem or something that could persist through the next product launches. This is crucial for Nvidia because its market leadership depends on this ability to innovate and successfully roll out a new product. Demand for Blackwell this winter, with it exceeding supply at certain moments, shows us customers are eager to get their hands on the next Nvidia innovation. That's positive, but Nvidia must smoothly deliver on promises in order to keep this momentum going. So far, with the Blackwell launch as a reference point, there's reason to be optimistic. And if Nvidia scores a win with the Blackwell Ultra launch too, the company could see its stock continue to march higher in the second half. Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy. Attention, Nvidia Shareholders: 1 Crucial Thing to Watch in the Second Half was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
