The SoFi Technologies, Inc. logo appears on a smartphone screen in this illustration photo in Reno, United States, on December 20, 2024. (Photo by Jaque Silva/NurPhoto via Getty Images)
NurPhoto via Getty Images
The stock price of SoFi Technologies (NASDAQ:SOFI) has increased by 60% this year, primarily due to the company’s announcement regarding new cryptocurrency investment options. This raises an important question: is the stock still a worthwhile investment? We believe it is. Although the current price of approximately $23 may appear risky from a valuation standpoint, our analysis indicates that there is little cause for concern.
We reached this conclusion by analyzing SoFi’s present valuation in relation to its recent operational performance and financial condition. Our assessment of SoFi Technologies, based on essential metrics such as Growth, Profitability, Financial Stability, and Downturn Resilience, shows that the company possesses a solid operational and financial base.
However, for investors looking for less volatility than individual stocks, the Trefis High Quality portfolio offers an alternative – having outperformed the S&P 500 and achieving returns exceeding 91% since its inception. Additionally, refer to – SoundHound AI: SOUN Stock To $2?
How Does SoFi Technologies’ Valuation Compare to The S&P 500?
When assessed by the amount you pay per dollar of sales or profit, SOFI stock appears significantly expensive in relation to the broader market.
- SoFi Technologies has a price-to-sales (P/S) ratio of 8.3 compared to a figure of 3.2 for the S&P 500
- Additionally, it has a price-to-earnings (P/E) ratio of 44.9 compared to the benchmark’s 23.7
How Have SoFi Technologies’ Revenues Progressed in Recent Years?
SoFi Technologies’ Revenues have experienced substantial growth over recent years.
- SoFi Technologies has realized its top line grow at an average rate of 35.0% over the last 3 years (compared to an increase of 6.1% for the S&P 500)
- Its revenues have increased by 31.5% from $2.3 billion to $3.1 billion in the past 12 months (with a growth of 5.0% for the S&P 500)
- Furthermore, its quarterly revenues grew by 42.8% reaching $855 million in the most recent quarter from $599 million a year ago (while showing a 4.8% improvement for the S&P 500)
How Profitable Is SoFi Technologies?
SoFi Technologies’ profit margins are approximately at the median level for companies within the Trefis coverage universe.
- During the last four-quarter period, SoFi Technologies’ Net Income totaled $562 million – indicating a strong Net Income Margin of 18.4% (compared with 12.7% for the S&P 500)
Is SoFi Technologies Financially Stable?
SoFi’s balance sheet appears robust.
- As of the most recent quarter, debt amounted to $4.0 billion against a market cap of $27 billion, suggesting a strong Debt-to-Equity Ratio of 15% (versus 19.4% for the S&P 500). [Note: A lower Debt-to-Equity Ratio is preferable]
- Cash and equivalents total $5.1 billion, representing a strong Cash-to-Assets Ratio of 12% out of $41 billion in total assets (compared to 6.8% for the S&P 500).
How Resilient Is SOFI Stock During A Downturn?
SOFI stock has performed significantly worse than the benchmark S&P 500 index during recent downturns. As investors hope for a soft landing in the U.S. economy, what could be the extent of the damage if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes.
Tariffs Imposition (2025)
- SOFI stock dropped 47% from a peak of $18 on January 24, 2025, to $9.50 on April 8, 2025, while the S&P 500 experienced a peak-to-trough decline of 19%
- The stock rebounded to its pre-crisis peak on June 30.
Inflation Shock (2022)
- SOFI stock declined 83.3% from a high of $25.78 on February 1, 2021, to $4.30 on December 7, 2022, compared to a peak-to-trough decline of 25.4% for the S&P 500
- The stock has not yet recovered to its pre-crisis peak
- The highest the stock has achieved since then is 24.23 on August 18, 2025, and it currently trades at around $23
Putting All The Pieces Together: What It Means For SOFI Stock
In conclusion, SoFi Technologies’ performance across the parameters outlined above is as follows:
- Growth: Very Strong
- Profitability: Strong
- Financial Stability: Strong
- Downturn Resilience: Very Weak
- Overall: Strong
The Verdict
SoFi stock has exhibited solid performance across crucial metrics. While its valuation of 8 times revenue may appear high relative to the S&P 500, this premium is warranted by the company’s strong growth. Over the past three years, SoFi’s revenue has expanded at an average annual rate of 35%, considerably exceeding the S&P 500’s 6%.
This growth trend is expected to persist, with revenues anticipated to increase by an average of 25% each year over the next three years, which bolsters the current valuation. Furthermore, a decrease in interest rates would further enhance SoFi’s business. For a more in-depth look at the company’s potential, we have conducted a separate analysis on upside potential that estimates a target price of approximately $33 per share.
Of course, our assessment could be incorrect. There is a risk that investors may not be inclined to pay such a high premium—especially considering the stock’s history of significant declines amid economic downturns. Nevertheless, we believe that for risk-tolerant investors with a three- to five-year investment horizon, SoFi remains an attractive buy despite its elevated valuation.
While SOFI stock appears promising, investing in a single stock can involve risks. Conversely, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has a history of comfortably outperforming its benchmarks across all three indices – the S&P 500, S&P mid-cap, and Russell 2000. What is the reason for this? As a collective, HQ Portfolio stocks have provided superior returns with lower risk compared to the benchmark index; resulting in less volatility, as illustrated in HQ Portfolio performance metrics.
