Is SoFi Stock a Buy Now?

SoFi Technologies (NASDAQ: SOFI) recently reported its earnings results, which looked quite stellar. The company beat earnings estimates laid out by analysts, and posted its first full-year GAAP profit since going public in 2021.

The company did a good job growing its capital-light businesses, which will continue to be a focus in 2025. However, despite the solid growth, SoFi stock was met with mixed reactions, and the stock declined 10% in the day following its earnings result.

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Following its solid results, is SoFi stock a good buy today? Let's dive into the business and what's next for SoFi to find out if it's right for you.

SoFi had excellent earnings results in 2024

SoFi recently announced its earnings, closing out an impressive year for the company. The fintech exceeded earnings expectations, with fourth-quarter revenue reaching $734 million, surpassing analysts' estimates of $682 million. The company's adjusted earnings per share came in at $0.05, slightly ahead of the anticipated $0.04.

A significant factor in SoFi's recent success is its acquisition of Golden Pacific Bancorp in 2022. This strategic move granted SoFi a banking charter, enabling the company to take in deposits and hold more loans on its books. With this banking charter, SoFi offered customers attractive annual percentage yields on their deposits.

At the end of Q4, SoFi reported nearly $25 billion in deposits, an increase from $17 billion just a year prior and up significantly from $5.9 billion at the end of 2022. This impressive growth in deposits reflects the company's aggressive approach to attracting customers to its platform. It also gives SoFi a robust capital base.

Image source: Getty Images.

Net revenue for its lending segment was $1.49 billion, while contribution profit was $891 million, representing an 8% growth from last year. Contribution profit is a metric used by management to evaluate the profitability of individual business segments. The modest growth was expected, as SoFi adopted a more cautious approach to lending in response to economic uncertainty last year.

These were the fastest-growing segments of SoFi's business

Other parts of SoFi's business grew much faster. Its financial services segment displayed massive growth, with contribution profit soaring to $307 million, a significant turnaround from a loss of $262,000 in the previous year.

This robust performance is primarily attributed to SoFi's deposit growth and elevated interest rates, which helped it increase its net interest income during the year. The company also managed its expenses well. They increased by 26%, significantly lower than the 88% increase in revenue from this segment.

In addition, its banking charter enables SoFi to build out its technology infrastructure for non-banking entities. The fintech has made substantial investments in platforms like Galileo and Technisys, transforming the fintech landscape.

Through Galileo, SoFi provides the essential back-end services that other fintech companies rely on. At the same time, Technisys helps support multiple products simultaneously, runs on the cloud, and allows banks to process and analyze data in real time. With this technology stack, SoFi aims to be the Amazon Web Services (AWS) of finance.

The technology segment appeals to SoFi because it is a steady source of fee-based revenue and provides the company with an alternative revenue stream to differentiate it from competitors. Growth here was solid, with contribution profit in its technology segment coming in at $127 million, a 34% increase from one year ago.

SOFI Revenue (TTM) data by YCharts.

Investors had a mixed reaction to SoFi's 2025 forecast

While backward-looking measures were solid, the company's forecast for this year had investors more reticent. It projected a full-year revenue of $3.2 billion on the low end, which is up 23% from 2024 revenue. Meanwhile, it projects GAAP earnings per share this year at $0.25 to $0.27.

Last year, SoFi was focused on bolstering its capital base. This year, "we want to better tilt our incremental revenue growth toward investment," according to CFO Chris Lapointe. Lapointe went on to say: "We have significant untapped addressable markets in front of us, and we have proven that the more we invest, the more we produce durable growth and strong returns."

Is SoFi a buy today?

SoFi is growing well, and its earnings turned profitable in 2024, which I like to see. The stock took a bit of a hit, alongside the broader market, following its earnings, and was likely down on the news that it will invest more in the business and build out to drive growth and returns.

The stock is pricey, trading at a forward one-year price-to-earnings ratio of 41 and a price-to-book ratio of 2.8. That said, its recent revenue and earnings growth and future growth opportunities make its high valuation more justifiable, making any dips in the stock a good buying opportunity for aggressive, long-term investors.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.