Shares of SoFi Technologies have risen 22% since Monday after reporting expectations-beating first quarter results and raising full-year guidance. (Disclosure: I am a SoFi shareholder).
Despite that good news, SoFi stock trades roughly 43% below its June 2021 peak of $23.
Can SoFi stock reach new all-time highs? The answer depends on whether the company creates new sources of growth to power a string of future beat-and-raise quarters – in which the company exceeds quarterly performance targets and offers guidance above what analysts expect.
To do that, SoFi must be among the small number of public companies that continues to provide upbeat forecasts – as tariff uncertainty impels many of them to stop offering guidance.
Moreover, government policy could hinder and help SoFi’s growth. Tariffs could drive many employers to part ways with employees – which could make the job market more difficult and increase SoFi’s loan charge-offs – as a Morgan Stanley analyst warns.
On the other hand, SoFi could benefit from looser cryptocurrency regulation which could create a new source of revenue growth. And pending legislation aimed at lessening government involvement with student loans could affect demand for SoFi student loans.
Ultimately, SoFi may continue to benefit from a growth flywheel – the Financial Services Productivity Loop – in which customer lifetime value rises as the company’s product innovation and brand building add new products, according to Stock Titan.
SoFi’s Performance And Prospects
SoFi exceeded investor expectations for the first quarter of 2025 and raised full year guidance.
The company “delivered our highest revenue growth rate in five quarters, driven by new records in members, products, and fee-based revenue,” SoFi CEO Anthony Noto said in a statement. “We are off to a tremendous start in 2025,” he added.
Here are the key numbers:
- First quarter 2025 adjusted net revenue: $772 million – 33% more than the previous year and $33 million more than the FactSet consensus featured by Barron’s.
- Q1 2025 earnings per share: six cents per share – double the FactSet view.
- Q1 2025 financial services revenue: $303 million – 101% more than the previous year, Barron’s noted.
- Q1 2025 student loan originations: $1.2 billion – up 59%, reported Barron’s.
- Q1 2025 fee-based revenue: $315 million – a 67% increase, wrote Barron’s.
- 2025 adjusted net revenue outlook: $3.273 billion – the midpoint of a range – which is 1% above SoFi’s previous guidance, noted Barron’s.
- 2025 EPS outlook: $0.275 per share – the midpoint of a range – 5.7% above previous guidance, Barron’s noted.
- 2025 adjusted earnings before interest, taxes, depreciation, and amortization outlook: $885 million – the midpoint of a range – 3.5% above previous guidance, reported Barron’s.
Since early 2018 when he became CEO, Noto said he wanted to build a “mission-driven company,” he told Barron’s. “From day one over seven years ago, it has always been our mission to become a one-stop shop,” he added.
Aiming to make SoFi one of the top 10 financial institutions in the U.S. based on market capitalization, SoFi wants to help customers “borrow better, save better, spend better, invest better, and protect better,” Noto concluded.
Public Companies’ Guidance Conundrum
SoFi appears to be relatively immune for now from the public company guidance conundrum – which is forcing CEOs to choose between the desire to raise guidance to benefit their stock prices and the tariff uncertainty making realistic forecasts nearly impossible for them to provide.
Business leaders are feeling anxious about the Trump administration’s shifting tariff policy and other regulatory changes, according to a poll conducted last week by business group Leadership Now Project and the Harris Poll, featured in a Wall Street Journal report.
In a survey of more than 300 senior corporate executives released April 29, 84% reported feeling “somewhat concerned or very concerned about how the current political and legal climate will affect their businesses,” noted the Journal.
This concern has led some public companies to pull their guidance. General Motors, JetBlue, Snap and Volvo are among the companies withdrawing their guidance because “the trade war’s unknowable course and consequences make it futile to forecast future performance,” reported the Journal.
Meanwhile, Porsche’s new guidance excludes any tariff impact beyond May. “If the current tariffs remain in place, Porsche would need to raise prices and adjust its guidance again, the company said, according to the Journal.
Tariffs are creating a new set of winners and losers financially. SoFi joins the list of winners – which include Netflix and ServiceNow, as I wrote in an April 25 Forbes post.
How Government Policy Could Affect SoFi’s Future
New government polices could have a mixed impact on SoFi’s future.
The good news is loosening policies towards banks operating in the cryptocurrency business represent an opportunity for SoFi – enabling the fintech firm “to offer crypto investing by year-end, barring unforeseen circumstances,” Noto told CNBC.
It is unclear how new legislation aiming to tighten student loans would affect SoFi’s business. The tighter lending terms in the bill could reduce demand for student loan refinancing. The bill could also increase loan charge offs in the short-term while improving longer-term credit quality, noted SoFi’s Q1 2025 earnings call transcript.
Finally, Trump’s tariffs could make it hard for SoFi to keep growing rapidly. If tariffs remain at current levels, trade tensions could hurt growth and push inflation higher, trends that motivated Morgan Stanley analyst Jeffrey Adelson to issue a sell rating on the stock and set a price target of $6, according to The Globe And Mail.
SoFi’s Growth Flywheel
In 2021, one analyst envisioned SoFi would grow rapidly by 2025 and forge a path to profitability. Mizuho’s Dan Dolev wrote that he saw SoFi enjoying 40% average annual revenue growth between 2021 and 2025 and becoming profitable in 2024, according to my September 2021 Forbes post.
Dolev was pretty close in his estimate. Between 2021 and 2024, SoFi’s revenues grew at a 39% average annual rate from $977 million to $2,640 million. In 2024, SoFi earned $479 million in net income – after a loss in 2023, according to a company release.
To reach profitability, SoFi needed to lower its costs as it grew. To that end, SoFi would need to invest in a platform to support new services and then encourage its customers to buy more of them, I wrote.
In so doing, SoFi might “spread its costs over more products — achieving economies of scope — and through excellent customer service had the potential to add many new customers,” according to my post.
Dolev envisioned this working as SoFi encouraged “user engagement, nurturing a flywheel effect of more users taking advantage of SoFi’s multiple services driving additional growth.” He expected this flywheel to create “operating leverage” as revenues grow — ultimately “shrinking losses and…delivering profits,” according to Nasdaq.
What’s Next For SoFi Stock?
Will Morgan Stanley’s bearish view prevail or will achieving Noto’s optimistic vision send the company’s stock price higher?
Here are three bullish analyst views:
- SoFi will gain market share. Through investments in lending, spending, savings, and advisory, the fintech is “positioned to take share at an accelerating rate from traditional financial institutions,” noted an April 29 William Blair report featured by Barron’s.
- SoFi is a source of stability. The earnings beat and increased guidance make the company “a beacon of stability in turbulent times,” Mizuho Securities analysts wrote, according to Barron’s.
- Private credit investor demand will drive growth. The boosted full-year guidance suggests the company’s momentum will likely continue through the year, “supported by demand from private credit investors,” noted Jefferies analysts featured by Barron’s.
Yet the 0.3% contraction in first quarter gross domestic product, according to CNBC, could mean the concerns Morgan Stanley raised could cap SoFi’s upside.
Disclosure: I own shares in SoFi Technologies – starting as an angel investor in 2014.