TLDR
- SoFi’s customer base grew 34% in 2024 to 10.1 million, with 785,000 new customers in Q4 alone
- Non-lending segments are growing faster, accounting for 49% of total revenue in 2024
- Major institutional investors including Vanguard Group have increased their stakes significantly
- Analysts have upgraded price targets, with JPMorgan Chase raising its target from $9.00 to $16.00
- Despite recent profitability, the stock is down more than 50% from its highs amid market correction
The Rise of Digital Banking
SoFi Technologies is making waves in the banking sector with its all-digital approach. The fintech company has been attracting attention for its user-friendly app targeted at students and young professionals.
The company has been growing at an impressive rate. SoFi’s total customer count increased by 34% in 2024, reaching 10.1 million users.
In the fourth quarter alone, SoFi added 785,000 new customers. This rapid growth demonstrates the appeal of SoFi’s digital-first banking model.
SoFi’s multi-pronged growth strategy involves attracting new customers while also upselling and cross-selling new products. This approach has helped increase customer engagement, revenue, and profits.
The company’s lending segment remains its largest business unit. However, the non-lending segments are growing faster and gaining importance.
These non-lending areas include financial services and SoFi’s tech platform. Together, they accounted for 49% of the company’s total revenue in 2024.
Strong Financial Performance
SoFi’s financial results have been impressive across all segments. The company reported overall revenue growth of 19% in the fourth quarter of 2024.
Product growth was even stronger at 32% for the same period. Most notable was the 594% increase in consolidated profit growth year over year.
The financial services segment showed particularly strong performance. It posted 84% revenue growth and 358% profit growth in the fourth quarter.
SoFi recently became profitable, a major milestone for any fintech company. For the quarter ending January 27, 2025, SoFi posted earnings per share of $0.05, exceeding analysts’ estimates by $0.01.
The company’s return on equity reached 3.82%. Its net margin stood at 18.64%, highlighting its improving profitability.
Looking ahead, management is forecasting revenue growth of 23% to 26% for 2025. They expect financial services to grow by 65%, with loan segments and the tech platform growing in the teen percentages.
Market and Investor Confidence
Despite strong fundamentals, SoFi stock has experienced volatility. It’s currently more than 50% off its highs following the recent Nasdaq correction.
The stock opened at $11.85 on Friday with a market capitalization of $12.99 billion. Its 52-week range spans from a low of $6.01 to a high of $18.42.
Institutional investors have been showing confidence in SoFi’s potential. Vanguard Group increased its holdings by 9.9%, adding 8.9 million shares in the fourth quarter.
Vanguard now holds 98.3 million shares valued at $1.51 billion. Norges Bank acquired a new stake worth $103.7 million.
Maridea Wealth Management recently disclosed a new position in SoFi. They purchased 52,096 shares worth approximately $802,000 in the fourth quarter.
Institutional investors and hedge funds now own 38.43% of SoFi’s stock. This indicates strong market confidence in the company’s growth trajectory.
Wall Street analysts have also turned more bullish on SoFi. JPMorgan Chase raised its target price from $9.00 to $16.00 while maintaining a “neutral” rating.
UBS Group increased its price target from $10.50 to $14.00. DBS Bank upgraded SoFi to a “strong buy,” highlighting its growth potential in the fintech sector.
SoFi is not without risks. The company has only recently become profitable and still faces economic volatility. Some company insiders have been selling shares.
In February, EVP Kelli Keough sold 9,185 shares at an average price of $15.43, totaling $141,724.55. CTO Jeremy Rishel sold 68,625 shares in March at an average price of $12.64.
However, insider selling doesn’t necessarily indicate lack of confidence. Executives often sell for diversification or personal financial reasons.
SoFi currently trades at a forward one-year P/E ratio of 28 and a price-to-book ratio of 2.2. These valuations seem reasonable given the company’s growth rate and future opportunities.
CEO Anthony Noto sees it as inevitable that SoFi will become a top-10 U.S. financial institution. The company continues to launch new products and features to engage customers.
Recent innovations include SoFi Plus, a membership program offering better rates and discounts. The company also launched a robo-advisor platform to help users navigate its investing tools more effectively.
For investors with some appetite for risk who can hold for at least a few years, the current dip in SoFi stock may present a buying opportunity. The company’s strong growth trajectory and expanding market presence make it a notable player in the evolving financial technology sector.
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