SoFi Stock’s Next Test: Can It Justify Its Premium Valuation?

Key Points

• SOFI stock is up 25% in the last three months, driven by strong Q1 earnings and bullish forward guidance for revenue and EBITDA growth.
• SoFi Technologies has overcome many investor concerns since going public via a SPAC in 2020.
• At a P/E ratio of 40x, valuation may cap further upside unless the stock breaks above key resistance around $15.30.

Since its launch into the public markets in 2020, SoFi Technologies Inc. NASDAQ: SOFI has had to overcome a variety of investor objections. However, before 2023, a premium valuation wasn’t one of them. The fintech company wasn’t profitable. Now that it is, investors are holding SoFi to a different standard. A price-to-earnings (P/E) ratio of 40x may take the fuel out of the stock’s recent rally.

Strong Growth Fuels a Bullish Run

SOFI stock is up more than 25% in the last three months. That period includes the company’s first-quarter earnings report, which came at the end of April. Revenue of $770.72 million was up 33% year-over-year (YOY), with the strongest growth coming from SoFi’s Financial Services business. Earnings per share (EPS) also increased sharply YOY from 2 cents a share to 6 cents per share.

However, the company’s forward guidance is the more likely factor propelling shares higher. SoFi is projecting approximately 33% YOY revenue growth in the current quarter and adjusted full-year revenue growth to be 25.6% at the midpoint. It’s also projecting a 27% adjusted EBITDA margin that would be slightly ahead of last year’s pace.

If investors needed one more thing to cheer, SoFi is forecasting an addition of 2.8 million members for the year. That’s a bit less than 2024, but still supportive of future growth.

Overcoming Objections Is Nothing New

SoFi has overcome numerous objections since going public in 2020. In fact, that’s a good place to start when considering what SoFi has achieved. 

SoFi Technologies went public via a special purpose acquisition company (SPAC). However, according to PitchBook, only about 10% to 15% of companies that went public via a SPAC in that time have managed to turn a profit. Even if you focus on the fintech sector, only OppFi Inc. NYSE: OPFI can match SoFi’s accomplishment of profitability as measured by generally accepted accounting principles (GAAP).

Since then, the stock has overcome other obstacles, including:

• Profitability – SoFi was unprofitable, which made it a risky stock in a rising interest rate environment. However, the company reported its first GAAP net income in 2023 and continues to show consistently higher net margins.

• Sustainable Revenue Growth – As the company has evolved from a student loan provider to a full-service bank, it has continued to post double-digit YOY growth. SoFi is also showing that it’s not dependent on any one segment for revenue.

• Student Loan Exposure – Many investors were scared away by SoFi’s exposure to student loans in light of the moratorium imposed in 2020. However, the bank has managed to diversify its loan portfolio.

• Customer Acquisition Costs – SoFi has aggressively marketed itself, leaving investors to wonder if this was an efficient use of resources.

In each case, SoFi has proven the naysayers wrong. However, investors have only seen a payoff in the last 12 months. Now that they have, the question is, has SOFI stock become too expensive?

Is SOFI Stock Worth Its Premium Valuation?

First, the good news. Even after the strong run-up since April, SOFI stock is down about 2.7% in 2025. That would seem to leave some room for the stock to run. On the other hand, SOFI is trading above the consensus price target of the analysts tracked by MarketBeat. That price of $14.73 suggests the stock could be overvalued by around 1.8%.

That gets back to the company’s P/E ratio. SoFi doesn’t fit neatly into the finance stocks category. It’s a financial technology stock, so a fair comparison may be a stock like Robinhood Markets Inc. NASDAQ: HOOD. That stock trades at around 47x earnings.

HOOD stock is up over 200% in the last 12 months, nearly doubling the growth of SOFI. However, the Robinhood analyst forecasts on MarketBeat suggest that the HOOD stock price is 24% above consensus.

The technical picture for SOFI stock is in the eye of the beholder. In early June, the stock showed an ascending triangle pattern, but other technical measures paint a more balanced, uncertain picture.

SoFi's long-term growth story looks strong. However, with no earnings until late July, investors may want to wait for a technical confirmation before getting involved. A strong move above $15.30 may be a sign that the bullish rally has legs. On the other hand, if the stock does drift lower, investors will want to look for support around $14.40, which has been a prior point of resistance for the stock.