Is SoFi Stock a Buy After Recent Dip?

SoFi Technologies, Inc. (SOFI) has been a market darling over the past two years, outperforming expectations and riding high on momentum before recently taking a nosedive. In 2024, SoFi climbed the charts with impressive growth metrics, but this year, the stock is navigating choppy waters, losing over 10% of its value in just the last month following less-than-stellar guidance for 2025 earnings. So, should you buy the dip or steer clear? Let’s break it down.

Understanding SoFi’s 2025 Guidance

SoFi’s CEO, Anthony Noto, recently projected 2025 earnings per share (EPS) in the range of $0.25 to $0.27. While this has raised eyebrows and led to some pullback in share price, Noto suggests the lower guidance is a strategic move. The company is heavily investing in its future, prioritizing long-term growth over short-term profitability, and anticipating an impressive annual revenue growth rate of 20% for the foreseeable future. This is a calculated risk, but the reality is that such forward-thinking can sometimes spook investors, especially when they’re looking for immediate returns.

SoFi’s Rapid Growth Metrics

Despite recent challenges, SoFi has showcased impressive growth dynamics. The company reported a staggering 34% year-over-year increase in its member base, bringing the total to over 10 million by the end of 2024. That’s incredible! If you think about it, these members are not just numbers; they’re a goldmine for cross-selling opportunities. Last year, 40% of new members opened additional products within 30 days of onboarding, illustrating significant engagement and growth potential.

The Lending segment deserves a mention here too. Despite some market fears, lending revenue grew by 11% year-over-year, which comfortably exceeded expectations. SoFi is handling its operations prudently, managing credit risk effectively while working on origination strategies that keep the business thriving without compromising on safety.

2026: A Potential Resurgence Year

Here’s where it gets exciting: SoFi expects to accelerate its growth trajectory in 2026. The company has recently been selected by the U.S. Department of Treasury for their Direct Express program, which could potentially unlock the floodgates for 3.4 million beneficiaries. Although the financial benefits from this initiative won’t materialize until 2026, the possibilities are significant and could provide an additional tailwind for growth.

In addition, SoFi has forged a partnership with a major U.S. financial services firm, positioning itself to be a top-10 client by revenue by 2026. The company now aims for topline growth to exceed previous projections of 20%-25%, which is optimistic. Expect an EPS range of $0.55 to $0.80 by 2026, reinforcing confidence in the company’s ability to rebound.

Market Sentiment and Analyst Outlook

Despite the promising growth narrative, street analysts remain cautious regarding SoFi’s stock, rating it as a consensus “Hold.” With a mean target price of $13.89—under current trading levels—and a Street-high target of $20 from Needham—a solid 38% upside—there’s room for movement. But make no mistake; many analysts are maintaining their distance due to perceived overvaluation concerns.

Valuation: Are Shares Overpriced?

Let’s address the elephant in the room: valuation. As it stands, SoFi’s tangible book value at the end of 2024 was pegged at $4.47 per share, leading some to conclude that its stocks are overvalued. The forward price-to-earnings (P/E) ratio of 55x certainly feels steep, especially when you put it against other financial institutions. However, let’s keep in mind that SoFi is transitioning towards non-asset-based income—a factor that can skew traditional valuation comparisons.

By 2026, based on the midpoint of its guidance, the P/E might settle around 21x, which could present a compelling entry point for those looking at a long-term investment horizon. For traders looking to capitalize on growth rather than dwell on current valuations, this could spell opportunity.

Final Thoughts: Is the Dip Worth Buying?

SoFi is navigating a unique juncture. While its recent dip may tempt short-term traders, others should consider the broader growth narrative and strategic investments within the company. If you’re bullish on long-term growth and believe in SoFi’s potential to disrupt the financial services sector, buying the dip could be a savvy move. Remember to keep positioning small and be aware of market volatility as we progress through 2025!

Stay tuned to “Traders on Trend” for the latest updates on stocks that show momentum!

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Is SoFi Stock the Ultimate Buying Opportunity After the Dip? Here’s What You Need to Know!