4 days ago
Is SOFI Stock's 150% Rally Just The Beginning?
Just last month, we talked about how SoFi stock could climb toward $30 levels. Fast forward a few weeks, and the stock is now trading near $24 – an impressive 2.5x increase from its April lows of below $10. Although crypto trading announcements first ignited this rally, recent developments indicate this momentum may have further staying power.
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The Interest Rate Tailwind
The most recent economic data is casting a more positive light on SoFi. The Consumer Price Index increased just 0.2% last month, down from June's 0.3% rise, as reported by the Labor Department's Bureau of Labor Statistics on August 12, 2025. This easing inflation data brings the Federal Reserve closer to a potential rate cut in September, with the market probability of such a cut now significantly high. [1]How Rate Cuts Benefit SoFi
Rate cuts provide several tailwinds for SoFi's business model. The most substantial impact is seen in the lending segment. Lower rates decrease SoFi's funding expenses while likely boosting loan demand as borrowing becomes more affordable for consumers. This creates a conducive environment for growth in loan origination, which is vital since lending continues to be SoFi's largest revenue segment. Furthermore, lower rates might rejuvenate growth in student loan refinancing and personal loans, two critical areas where SoFi has traditionally thrived. Take a look at our in-depth analysis on SoFi's revenue comparison.
Potential Headwinds to Watch
Despite the favorable momentum, several risks could hinder this rally:
The Rally May Have More Room
The convergence of two formidable catalysts – crypto platform expansion and the potential for declining interest rates – sets up a compelling scenario for ongoing gains. Digital lending companies like SoFi are well-positioned to gain significantly from rate cuts, while the crypto offering introduces an entirely new revenue stream not included in earlier growth forecasts.
The timing couldn't be more advantageous. As interest rates fall, SoFi's core lending business should experience improved margins and heightened demand. Meanwhile, the crypto platform launch taps into a fast-growing market segment that has generated hundreds of millions for competitors like Robinhood.
While uncertainties linger, the fundamental factors indicate this rally may continue to gain momentum. Investors who missed the initial move from $10 may still discover opportunities, though they should remain aware of the high valuation, execution risks, and competitive challenges ahead. Remember, there is always a significant risk when investing in a single, or just a few, stocks. Consider Trefis High Quality (HQ) Portfolio, which, with a collection of 30 stocks, has a proven track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? Overall, HQ Portfolio stocks have delivered better returns with lower risk compared to the benchmark index; less of a roller-coaster experience as shown in HQ Portfolio performance metrics.
