Like Robinhood and Shopify, SoFi is increasingly expanding its financial services ecosystem, making it a worthy topic of whether this is just the beginning of what could be a far more extensive rally in SOFI.
At the cusp of optimism for SoFi stock is that the company has reduced its reliance on consumer lending services, expanding into banking, investing, and cryptocurrency trading. This has led to exceptional subscriber growth, with memberships climbing 15% this year alone from 10.9 million in Q1 to 12.6 million at the end of Q3. Furthermore, SoFi’s subscriber base has expanded 35% year over year.
These new customers represent long-term monetization potential as SoFi adopts multiple services. The introduction of blockchain-powered remittances has also fueled SoFi’s user growth, which includes cross-border money transfers that use blockchain technology to make transactions faster, cheaper, and more transparent compared to traditional remittance systems that are typically used by migrant workers or individuals to send funds to family or communities abroad.
Outside of fraud prevention, SoFi is using AI-driven innovation to boost its operational efficiency and ecosystem expansion while reducing costs. Strategic partnerships with the Bitcoin Lightning Network and the acquisition of payment solutions and fintech infrastructure providers, Galileo and Technisys, have positioned SoFi as a leader in the growing trend of fintech consolidation.
The bullish technical momentum in SoFi stock has regained steam after retaking and breaking out above a current 50-day simple moving average (SMA) of $28 a share (green line) last Tuesday.
Illustrating that buyer exhaustion has yet to set in, SOFI has been on a relentless uptrend since forming a golden cross back in mid-June, where its short-term 50-day SMA crossed above the 200-day SMA (red line).
Indicative of strong growth expectations, SoFi stock is trading at a noticeable premium to the broader market at 77X forward earnings. That said, SoFi is starting to rapidly move past the probability line since going public in 2021.
After achieving $479.1 million in net income last year, compared to a $341.2 million net loss in 2023, SoFi was able to post positive adjusted EPS for the first time at $0.15 per share.
Plus, fiscal 2025 EPS is now expected at $0.36, with SoFi’s bottom line projected to stretch another 65% in FY26 to $0.60 per share. More reassuring is that FY25 and FY26 EPS estimates are modestly higher over the last 60 days.
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Rapid sales expansion is also persuasive regarding future earnings potential, and SoFi’s price-to-sales valuation is not absurd at 9X, although its median forward P/S ratio in recent years is at 3X.
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Justifying its P/S premium is that SoFi’s annual sales are expected to increase nearly 37% this year and are projected to soar another 25% in FY26 to $4.48 billion.
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Moving past the speculative growth phase, SoFi’s stock is thriving because it has started to prove its operations can produce a real profit engine. Correlating with such, SOFI currently sports a Zacks Rank #2 (Buy) based on the positive trend of EPS revisions.
Given it’s high valuation, any slowdown in user growth or profitability could trigger volatility, but if the fintech firm continues to capitalize on its expansion course, this may very well be the beginning stages of a far more extensive stock rally.
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SoFi Technologies, Inc. (SOFI) : Free Stock Analysis Report
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Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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