After a 142% Rise, Can SoFi Stock Keep Climbing?

Yahoo

3 hours ago

Shares of SoFi Technologies (SOFI) have been on a remarkable run. Over the past year, the fintech company's stock has surged 142%, driven by strong revenue growth, expanding product adoption, and a business model increasingly focused on high-margin, capital-light segments.
While the recent run in SoFi stock has raised valuation concerns, its recent financial performance suggests that the stock has more room to run.
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SoFi added 800,000 new members in the first quarter of 2025, bringing its total to 10.9 million, a 34% year-over-year increase. It also expanded its product suite, adding 1.2 million new products for a total of over 15.9 million. This surge in user engagement helped drive adjusted net revenue to a record $771 million, up 33% from the same period last year. It's SoFi's fastest revenue growth in more than a year.
What's even more notable is the shift in its revenue mix. The fintech company has made a deliberate push into fee-based, non-lending businesses that require less capital and carry fewer risks. These segments are now playing a larger role in its growth story. Non-lending revenue hit $407 million in Q1, marking a 66% year-over-year increase, while fee-based revenue rose 67% to a record $315 million.
SoFi's Financial Services division continues to deliver solid growth. Revenue more than doubled to $303 million in Q1. Per-product revenue also jumped, climbing from $59 to $88 in just one year—an almost 50% increase.
One of the fastest-growing areas for SoFi is its Loan Platform Business (LPB), where it originates loans for third parties. In just under a year, LPB has achieved an annualized run rate of over $6 billion in originations and is now generating more than $380 million in high-margin, fee-based revenue. In Q1, LPB added $96 million in adjusted net revenue, a 44% jump from the prior quarter. Recent deals, including a $5 billion agreement with Blue Owl, a $2 billion extension with Fortress, and a $1.2 billion joint venture between Fortress and Edge Focus, are expected to fuel even faster growth.
These LPB loans don't carry credit risk for SoFi, deepening customer relationships and supporting future cross-selling opportunities.
Meanwhile, SoFi's Tech Platform remains a steady contributor. First-quarter revenue came in at $103 million, up 10% year-over-year, despite a slight drop in accounts linked to client diversification efforts. Profitability remains strong, and new client wins are expected to help offset recent churn, with projections for stronger performance into 2026.
On the lending side, SoFi posted another solid quarter. Adjusted net revenue rose 27% to $412 million, with a 58% contribution margin. Total loan originations reached an all-time high of $7.2 billion, up 66% year-over-year. Personal loans led the way at $5.5 billion, including $1.6 billion from third-party originations via LPB. Student loan originations increased by 59%, and home loan originations were up by 54%.
SoFi was also active in the capital markets, selling or transferring $3.1 billion in personal and home loans. These transactions helped SoFi realize gains through favorable sale pricing and premium servicing fees. Even delinquent loans were monetized effectively, with $90 million sold at improved recovery values.
SoFi has continued to strengthen its balance sheet. Deposits now total $27.3 billion, providing the company with a stable and low-cost funding base. This expansion has helped lower its annual funding expenses by an estimated $515 million.
Looking ahead, SoFi expects to add 2.8 million new members in 2025, a 28% jump year-over-year. As SoFi's member base expands and the ecosystem deepens, it will likely see higher activity per user, which will support its earnings.
SoFi's top line is projected to increase by 24% to 27%. Moreover, with profitability improving across the board, the company is well-positioned to deliver sustainable long-term earnings.
While the momentum in SoFi's business will likely sustain, Wall Street remains cautious. The consensus rating on the stock is currently 'Hold,' with analysts wary of SoFi's valuation after a significant rally over the past year.
SoFi is delivering exceptional growth, driven by rapid member acquisition, strong revenue expansion, and a strategic shift toward capital-light, high-margin businesses. With projections of strong top-line growth and improving profitability, SoFi appears poised to sustain its upward trajectory.
On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com