Buoyed by strong Q1 2025 results, shares of SoFi Technologies (NASDAQ: SOFI), a digital financial company, are up 5% in pre-market trading today, April 29. The company reported earnings per share of $0.06 on revenue of $772 million, significantly exceeding consensus estimates of $0.03 per share and $739 million, respectively.
This positive performance was further amplified by the company’s upward revision to its full-year outlook. Despite SOFI stock being down 6% year-to-date (as of April 28) due to ongoing tariff concerns fueling fears of prolonged high interest rates—a headwind for the company—investor optimism appears to be supported by a continued expansion of its user base. Now, if you are looking for an upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
How Did SOFI Fare In Q1?
The company demonstrated strong financial performance in the first quarter of 2025, with SoFi Technologies revenue reaching $772 million, a 20% increase compared to the same period last year. This growth was largely attributable to higher fee-based revenues, which coincided with a significant 34% year-over-year rise in its total member base, now standing at 10.9 million. Across its segments, SOFI experienced substantial gains: financial services products sales more than doubled year-over-year to $303 million, the lending segment saw a 27% increase in sales to $413 million, and technology platform revenue grew by 10% to $103 million.
SOFI’s outlook for the near and long term is positive. The company projects Q2 2025 revenue to be between $785 and $805 million, with earnings per share estimated at $0.05 to $0.06. For the full year of 2025, SOFI has revised its revenue guidance upward to $3.23 to $3.31 billion (from $3.20 to $3.27 billion) and increased its earnings per share outlook to $0.27 to $0.28 (from $0.25 to $0.27).
What’s Happening With SOFI Stock?
In terms of market performance, SOFI stock has shown an upward trend following the release of its recent earnings. However, examining its longer-term performance reveals significant fluctuations. Over the past four years, SOFI’s annual returns have been considerably more volatile than the S&P 500, with returns of 27% in 2021, -71% in 2022, 116% in 2023, and 55% in 2024.
In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Does SOFI Stock Have Room For Growth?
Given the current uncertain macroeconomic environment around tariffs, could SOFI face a similar situation as it did in 2022 and underperform the S&P over the next 12 months — or will it see a strong jump? We believe that SOFI stock seems to be fully valued. At its current levels of $14, SOFI is trading at 5.5x trailing revenues, higher than the stock’s average P/S ratio of 4.5x over the last three years.
Furthermore, for SOFI specifically, the current 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. Overall, we believe that investors will likely be better off waiting for a dip to pick SOFI stock. Notably, the $14 average of analysts price estimates aligns with the current stock price, implying that SOFI stock is now fully valued.
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