SoFi Technologies (NASDAQ:SOFI),a digital financial company that offers a range of products and services, including banking, lending, investing, and insurance, has seen its stock plunge nearly 25% in the past thirty days. This downturn can be largely attributed to growing anxieties surrounding the broader economic outlook. President Donald Trump’s recent announcement of sweeping tariffs on goods from over 100 countries has heightened concerns about its potential negative impact on the U.S. economy and consumer spending. This situation is further aggravated by China’s retaliatory tariffs, which are higher than anticipated and are fueling an escalating global trade war, resulting in a significant downturn in global markets. Separately, see Apple Stock Can Weather Tariff Storm. See How.
For SOFI specifically, these macroeconomic headwinds present several challenges. Persistent inflation could prevent the U.S. Federal Reserve from implementing further interest rate cuts, which would negatively impact SOFI’s lending business. Furthermore, a potential economic recession would likely dampen demand for SOFI’s financial services. We believe that SOFI stock looks unattractive – making it a bad pick to buy at its current price of around $9. We believe there are a couple of concerns with SOFI stock, which makes it unattractive given that its current valuation looks very high.
We arrive at our conclusion by comparing the current valuation of SOFI stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of SoFi Technologies along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a moderate operating performance and financial condition, as detailed below. That said, if you seek upside with lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
How Does SoFi Technologies’ Valuation Look vs. The S&P 500?
Going by what you pay per dollar of sales or profit, SOFI stock looks expensive compared to the broader market.
- SoFi Technologies has a price-to-sales (P/S) ratio of 4.8 vs. a figure of 3.2 for the S&P 500
How Have SoFi Technologies’ Revenues Grown Over Recent Years?
SoFi Technologies’ Revenues have grown considerably over recent years.
- SoFi Technologies has seen its top line grow at an average rate of 39.2% over the last 3 years (vs. increase of 6.3% for S&P 500)
- Its revenues have grown 23.9% from $2.1 Bil to $2.6 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
- Also, its quarterly revenues grew 22.2% to $734 Mil in the most recent quarter from $601 Mil a year ago (vs. 5.0% improvement for S&P 500)
How Profitable Is SoFi Technologies?
SoFi Technologies’ profit margins are around the median level for companies in the Trefis coverage universe.
- SOFI Operating Cash Flow (OCF) over this period was $-1.1 Bil, pointing to a very poor OCF-to-Sales Ratio of -42.9% (vs. 15.7% for S&P 500)
Does SoFi Technologies Look Financially Stable?
SoFi Technologies’ balance sheet looks fine.
- SoFi Technologies’ Debt figure was $3.2 Bil at the end of the most recent quarter, while its market capitalization is $10 Bil (as of 4/4/2025). This implies a moderate Debt-to-Equity Ratio of 25.3% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
- Cash (including cash equivalents) makes up $4.3 Bil of the $36 Bil in Total Assets for SoFi Technologies. This yields a moderate Cash-to-Assets Ratio of 12.0% (vs. 14.8% for S&P 500)
How Resilient Is SOFI Stock During A Downturn?
SOFI stock has fared much worse than the benchmark S&P 500 index in the last economic downturn. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
- SOFI stock fell 83.3% from a high of $25.78 on 1 February 2021 to $4.30 on 7 December 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $18.03 on 23 January 2025 and currently trades at around $9.60
Putting All The Pieces Together: What It Means For SOFI Stock
In summary, SoFi Technologies’ performance across the parameters detailed above are as follows:
- Growth: Extremely Strong
- Profitability: Neutral
- Financial Stability: Neutral
- Downturn Resilience: Extremely Weak
- Overall: Neutral
Despite SOFI’s seemingly neutral performance when considering the above factors, its very high valuation makes us believe the stock is not a compelling buy at its current price.
While you would do well to avoid SOFI stock for now, you could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
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