We came across a bullish thesis on SoFi Technologies, Inc. (SOFI) on Substack by The Valley Investor. In this article, we will summarize the bulls’ thesis on SOFI. SoFi Technologies, Inc. (SOFI)’s share was trading at $12.73 as of March 19th. SOFI’s trailing and forward P/E were 32.64 and 39.84 respectively according to Yahoo Finance.
A modern fintech office space, its sleek lines and bright colors highlighting the cutting-edge focus of the digital banking technology.
SoFi Technologies (SOFI) has successfully transformed from a student loan specialist into a comprehensive financial services provider, integrating lending, banking, and fintech infrastructure. The company has built an ecosystem designed to acquire customers early and retain them across multiple products, creating a scalable business model with an expanding high-value customer base and emerging profitability. SoFi’s strategic vision is to become a one-stop destination for financial needs, having expanded from student loans to personal loans, mortgages, credit cards, and establishing SoFi Bank, which provides a significant competitive advantage through deposit-based funding. The company also operates Galileo and Technisys, technology platforms that deliver banking infrastructure to other businesses, completing its three-pronged approach of lending, financial services, and technology.
SoFi’s bank charter represents a crucial strategic edge, allowing access to approximately $25 billion in customer deposits that serve as a low-cost funding base for its lending operations. This contrasts with most fintechs that rely on external funding sources susceptible to market volatility. The company excels in cross-selling, effectively keeping customers within its ecosystem through multiple financial products. SoFi’s unique position combines the breadth of traditional banking with the technology-driven experience of modern fintech, enhanced by strong brand awareness from high-profile marketing initiatives like SoFi Stadium, which attracts lucrative high-income, tech-savvy customers.
The company’s financial performance demonstrates impressive growth and improving profitability, with revenue increasing from $565 million in 2020 to $2.64 billion in 2024, representing a ~70% CAGR. SoFi has achieved GAAP profitability with $499 million in net income for 2024 (including tax benefits) and expanded adjusted EBITDA margins to 26%. Loan originations reached $23.3 billion in 2024, driven by personal loans and revived student loan refinancing, while the growing deposit base enhances margins.
SoFi’s growth trajectory continues with expansion opportunities in banking, technology segments, and new product offerings. The company’s valuation at $12-13 per share presents three potential scenarios: a base case of ~20% upside if SoFi maintains ~20% revenue growth and expands net margins to 10%+; a bull case of ~60% upside if financial services scale faster with 15%+ net margins; and a bear case of ~40% downside if macroeconomic challenges slow growth. Despite likely short-term volatility, SoFi offers an attractive long-term opportunity for investors, leveraging its ecosystem of bank charter, cross-selling strategy, and technology infrastructure as durable competitive advantages.
SoFi Technologies, Inc. (SOFI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held SOFI at the end of the fourth quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of SOFI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SOFI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.