Buy Or Sell SOFI Stock At $24?

Forbes

3 days ago

CHONGQING, CHINA - JULY 27: In this photo illustration, a smartphone displays the logo of SoFi ... More Technologies Inc. (NASDAQ: SOFI), a U.S.-based online personal finance company and digital bank, in front of a screen showing the company's latest stock market chart on July 27, 2025 in Chongqing, China. (Photo illustration by)
SoFi Technologies stock (NASDAQ:SOFI) surged 14% in early trading on Tuesday, July 29, after the announcement of strong Q2 earnings. The firm disclosed earnings of $0.08 per share on revenue of $855 million, considerably surpassing Wall Street's projections of $0.06 per share and $804 million, respectively. To add to the positive developments, SoFi has upgraded its full-year 2025 forecast. Management now expects adjusted net revenue of roughly $3.375 billion, indicating approximately 30% annual growth (up from the earlier guidance of 24% to 27%). Furthermore, GAAP EPS is anticipated to be around $0.31 per share, an increase from the previous estimate of $0.27 to $0.28 per share.
In fact, in our prior analysis, we noted SoFi's historical tendency to yield positive stock returns following earnings announcements. Nevertheless, the critical question now is whether the stock is worth buying at its current price of $24. We contend that SOFI stock seems risky due to its exceptionally high current valuation.
This conclusion is derived from a comparison of SoFi's prevailing valuation against its recent operational performance and its current and historical financial health. Our comprehensive evaluation of SoFi Technologies, which includes key parameters like Growth, Profitability, Financial Stability, and Downturn Resilience, suggests that the company possesses a moderate overall operating performance and financial condition.
However, for investors seeking lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative—having outperformed the S&P 500 and achieved returns exceeding 91% since its inception. Separately, see – Celcuity: What's Happening With CELC Stock?
How Does SoFi Technologies' Valuation Compare to The S&P 500?
Based on what you pay for each dollar of sales or profit, SOFI stock seems overpriced in comparison to the overall market.
How Have SoFi Technologies' Revenues Changed in Recent Years?
SoFi Technologies' Revenues have increased significantly over recent years.
What is the Profitability of SoFi Technologies?
SoFi Technologies' profit margins are roughly at the median level for companies within the Trefis coverage universe.
How Resilient is SOFI Stock During Economic Downturns?
SOFI stock has performed significantly worse than the benchmark S&P 500 index during some recent downturns. As investors hope for a soft landing of the U.S. economy, how severe could the situation become if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash tracks how key stocks performed during and after the last six market crashes.
Putting All The Pieces Together: Implications for SOFI Stock
In conclusion, SoFi Technologies' performance across the aforementioned parameters is as follows:
While SoFi has demonstrated moderate performance in the aforementioned areas, its current valuation represents a considerable risk, rendering it a less appealing investment in our opinion. We recognize that our evaluation may be conservative, and investors might consider paying a premium for SoFi due to its strong revenue growth. (We have explored a possible upside scenario for SoFi in a separate analysis.)
Nevertheless, SoFi stock is presently trading at over 9 times its trailing revenues, which is significantly higher than its three-year average of 4.5 times. Additionally, the stock has experienced substantial declines during adverse market conditions. This historical volatility, combined with its inflated valuation, indicates a high level of risk for SoFi at its current price points.
Overall, investing in a single stock can be hazardous. Conversely, the Trefis High Quality (HQ) Portfolio, which includes a collection of 30 stocks, has a proven history of comfortably outperforming the S&P 500over the last 4-year period. What accounts for this? As a group, HQ Portfolio stocks have provided better returns with less risk compared to the benchmark index; a smoother ride, as demonstrated in HQ Portfolio performance metrics.