SoFi Technologies - Banking Disruptor in the US

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Q1 out, strong growth continues :flexed_biceps: But it just wasn’t enough for Mr. Market based on the initial reaction :cold_face:

The reasons for the reaction seem to be mainly that the Q2 guidance is light compared to expectations and development regarding the tech platform was weak.

To my eye, at a quick glance, it looks like growth is starting to slow down. Need to investigate further.

SoFi Reports First Quarter 2026 with Record Net Revenue of $1.1 Billion, Record Member and Product Growth, Net Income of $167 Million

Adjusted Net Revenue up 41% to a record $1.1 billion
Adjusted EBITDA up 62% to a record $340 million
Total Loan Originations at a record $12.2 billion
Member growth up 35% to a record 14.7 million members
Product growth up 39% to a record 22.2 million products

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  • 2021Q1 revenue: 216M

  • 2021Q1 adjusted EBITDA: 4M

  • 2021Q1 EPS: -$1.61

  • 2021 share price at the close of SoFi’s first trading day (June 1, 2021): $22.65

  • 2026Q1 revenue: 1100M (+409%)

  • 2026Q1 adjusted EBITDA: 340M (+8400%)

  • 2026Q1 EPS: $0.12

  • Share price now: $15.88 (-30%)

What’s wrong here? It feels like any other company would have rocketed along with its business figures. SoFi just falls like a stone, even though the numbers are excellent in every report. Dilution is obviously one reason, as the share count has increased by about 60%, but that doesn’t explain the sluggish share price performance at all.

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To be fair, those valuations in the early days were unrealistic to say the least. And with all the hype and SPAC combinations on top of that, there was plenty of speculation. There was no visibility into the current figures back then. And dilution on top of that.

But the current valuation is starting to be quite reasonable—not cheap yet, of course, but okay considering the growth figures. For example, a 2026e P/E of 27 based on a quick look at the materials isn’t impossible with these growth figures. And yes, it’s adjusted EPS :slight_smile:

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P/E isn’t the best metric for a growth company that has only just achieved positive EPS anyway, but it can probably start being included at this point.

Largest position in my portfolio, so the portfolio performance looks “nice” again :man_facepalming: /s

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This was picked up from a tweet thread that also featured other companies.

The text below highlights largely familiar points, such as how SoFi appears to be moving in the right direction despite the share price decline. It also noted that the company is no longer just a lending business, but is increasingly building itself into a digital finance platform.

Customers are adopting more products, loan volumes are increasing, and fee income is growing further. This makes the company’s business more diversified than before and interesting for the long term—especially when considering the drop in the share price. :slight_smile:

https://x.com/BourbonCap/status/2055640980091551854

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Taking it with a massive grain of salt as I read this mega-bull tweet that I’d love to trust 100%, but well, there is some truth to it. :slight_smile:

https://x.com/1000xStocks/status/2058990484060573771

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This reply is perhaps more realistic :smiley:

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Can someone break down this SoFi dilution situation a bit, which comes up regularly especially in bear arguments? How many shares are expected to be granted to Noto and company, for example, over the next five years?

In general, it would be interesting to hear what potential risks people see here, especially from those who own SoFi themselves and thus see the upside potential as greater than the risks. The internet is full of praise and hype, but generally speaking, assessing risks has proven to be the most essential factor in my own successful investment decisions (yes, there are a few of those too).

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SOFI = Trailing P/E 34.71 Forward P/E 26.04
Quarterly Revenue Growth (yoy) 42.50%

2 major factors that distinguish SoFi from traditional banks:

  1. Absence of brick-and-mortar branches (moat 0), all banks can transform into this if they wish.
  2. Own technology platform. Let’s look at the technology platform through two metrics:
    Customers and revenue: customer numbers have remained stagnant and revenue has plummeted because it lost a major client, though no one can say it won’t lose another major client in the next quarter. The technology platform clearly wasn’t able to scale within the financial sector for other companies to use as extensively as hoped, and AI could change the playing field entirely; brick-and-mortar banks might jump straight from 70s code to the AI era (my understanding is that some bank software is very old).
    Simply put, SOFI lost its window of opportunity; if its platform had become the industry standard, the situation would be completely different.

Let’s look at another—a different sector of course, but also a US technology stock—whose main memory products were already mostly sold out through 2027 at the beginning of the year, meaning Micron’s figures for comparison:

Trailing P/E 35.44 Forward P/E 7.63
Growth: Quarterly Revenue Growth (yoy) 196.30%

Sentiment: If/when the base rate is raised by 0.25% at the FED meeting, which stock will take a bigger hit?

If oil doesn’t start moving in the Persian Gulf soon, it will raise the price of everything in the US, as the country’s goods move on wheels.
SoFi stock looks cheap but
 Well, I own a small position myself and will try to sell if it bounces at some point. The next catalyst is the Clarity Act, if that moves forward, since SoFi also has some exposure to cryptos.

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Stock dilution is business as usual for a growth company and it is used to fund growth; I would only be concerned if the money were used just to keep the lights on. Apple, Tesla, Amazon, etc., have all increased their number of outstanding shares by massive amounts, and it has paid off big time. SoFi is still delivering good results, and even though the technology platform’s performance was a disappointment, SoFi is growing even without it. I can’t even be bothered to think about those trillion-dollar valuations; it’s completely useless to speculate more than a year out. This is my largest holding and I’m still buying at these prices. You never know what multiple the stock will eventually get, but at a $10-15 share price, I think there’s a pretty good margin of safety even if things go really wrong.

This was actually quite an entertaining listen, even though I don’t usually care to watch these YouTube videos as I try to filter out all the noise. Noto is definitely a sharp guy and I like him a lot. The video mainly sheds light on his own vision for the company.

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Valuations can be compared to, for example, NU Bank.
Here is some kind of comparison on the matter:

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I wouldn’t even really think of them as competitors with each other. Even if Nu were to enter the US, would people actually trust a foreign bank with their money, and what would happen to margins, etc. Both are taking market share from traditional banks rather than from each other. Currently, they have different markets, different products, and different regulations. Traditionally, foreign stocks in the US will also always trade at a lower valuation.

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We’ll find out within a year or two. Nu received a conditional banking license for the USA at the beginning of the year and has started operations there. Still cautiously without mega-investments, but once the banking license is fully approved, I expect they’ll put more resources into it.

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I know Finnish banks very well myself and often compare and weigh SoFi against US competitors, and for example, Nordnet against Nordea or Osuuspankki. Right off the bat, I’ll say that I don’t own Nordnet because it primarily focuses only on investing, and in my opinion, its growth in the Nordics is limited, unlike SoFi’s.

If Nordnet offered daily banking services, mortgages, credit cards, insurance, payment services, and everything else on a cheaper and better platform, I would certainly move everything to Nordnet from the traditional banks. However, I only have small investments in Nordnet and a large customer relationship with a traditional bank where I can get everything under one roof.

From an investment perspective, I feel that if Nordnet offered all these other services, I would gladly be a shareholder. Its numbers and stock have performed well solely on the basis of a better and cheaper investment platform.

I feel that SoFi is the Nordnet of the USA, except that it focuses for the most part on everything other than investing, but offers virtually everything on a cheaper and better platform than US brick-and-mortar banks.

I hold a very heavy weight in SoFi as long as the growth remains this strong and the story stays the same or improves. I believe that inclusion in the S&P 500 index will happen within 12 months, and in the meantime, growth is very intense; the stock price will likely rise before and even more likely after joining the S&P 500.

I see the biggest long-term risks being if Robinhood expands its service offering or if, for example, Nu takes over the USA quickly. In the short term, I don’t believe in these risks yet. I check SoFi’s growth and story every quarter, and so far, I have been a very satisfied shareholder for over 4 years. Buying more during major dips and trimming slightly during peaks.

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Good analysis and I agree otherwise, but as a small side note, “Nordnet” and “cheaper prices than others” jars my ears. Personally, I find Nordnet’s pricing so outrageous that executing every transaction there makes me wince, and I regret opening my equity savings account (OST) there year after year. The platform is indeed very good, though; that’s what has kept me as a customer.

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Yes, there was actually some news behind today’s rise. The bank launched the SofiUSD stablecoin. So, it’s a cryptocurrency pegged to the USD exchange rate. I don’t really understand much about it, so is this a big deal? It seems to be at least the first bank to do something like this. https://www.investing.com/news/stock-market-news/sofi-technologies-stock-surges-7-on-stablecoin-launch-93CH-4716501

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Yeah, SoFi is a bank first. That stablecoin is potentially a pretty big deal, even outside the crypto market. It enables things like settling payments quickly and affordably 24/7/365, and the partnership agreement announced with Mastercard is related to exactly this.

I have to say, even though SoFi’s technology platform hasn’t generated much revenue yet and growth has been sluggish, goddamn the speed at which they can roll out new products to the market when they have the technology in-house.

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https://investors.sofi.com/news/news-details/2026/Introducing-SoFi-Coach-An-AI-Powered-Financial-Guide-to-Help-Members-Get-Their-Money-Right/default.aspx

Exactly the kind of stuff that brings a lot of added value to customers. However, it likely requires that all financial transactions flow through SoFi so that there is enough data for high-quality analytics. Which, of course, is not a bad thing for SoFi.

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There is actually something to keep an eye on for the rest of the week, as SoFi is once again up for consideration for the S&P 500 index.

Edit: incorrect information removed

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I had written complete nonsense in my previous comment regarding the timing of SoFi’s market cap determination, and Gemini lied as well. SoFi’s market cap determination for the S&P 500 index has already taken place, and SoFi meets the index criteria.

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