Sometimes it pays to look below the surface. Shares of SoFi Technologies (SOFI -5.00%), a company known for student loan refinancing, have been hammered ever since President Joe Biden tried to wipe out a big chunk of outstanding student loans.

SoFi's stock is now down 79.9% from its all-time high, set in 2020. But those of us who have been paying closer attention to the up-and-coming all-digital bank know that its student-loan refinancing operation has become a relatively small part of a growing business that is taking its industry by storm.

SoFi recently presented results from the third quarter, and they were a whole lot better than the stock's sinking price would suggest. In fact, the company gave investors heaps of reasons to buy the stock now and hold it for the long run. Here are three that stood out the most.

1. Rapid membership growth

Overall growth at SoFi is off the charts. The bank added 424,000 new members in the third quarter, which brought its total up to 4.7 million, which is 61% more than it had a year earlier. 

Unlike many of its fintech peers, SoFi obtained a national banking charter this January. This allows it to directly fund lending products with consumer deposits. Total deposits grew 86% year over year to $5 billion at the end of September, and we can expect this figure to continue expanding rapidly. Around half of new SoFi Money members become direct depositors within their first 30 days.

To give you a clue of where SoFi deposits could be heading, consider the oldest digital bank in the business, Ally Financial. This is the former financial arm of General Motors, and it has 2.6 million retail depositors. Despite having 2.1 million fewer depositors than SoFi, total retail deposits at Ally reached $133.9 billion at the end of the third quarter.

2. Business is still booming

Financial services products like checking and savings accounts are outpacing new lending products. That said, lending product growth is a lot stronger than you might expect in the face of rising interest rates. SoFi finished September with 1.3 million lending products, which were 24% more than it had a year earlier.

In addition to a consumer banking business, SoFi owns the leading technology platform that fintech businesses use to issue and manage their own financial products. At the end of September, its Galileo platform enabled 124 million accounts for over 55 platform partners. This has been a lousy year for fintech start-ups, but the number of Galileo-enabled accounts still rose 40% year over year in the third quarter.

Individual looking at stock charts.

Image source: Getty Images.

3. Cash-flow positive

Fintech businesses in a high-growth phase tend to run steep losses while they try to achieve scale. SoFi looks like a great stock to buy now because it's already generating positive cash flows.

As any traditional bank will tell you, using relatively low-interest customer deposits to fund higher-interest lending products such as personal loans is a lucrative endeavor. In its second full quarter of operations, SoFi's Banking business generated $29 million in net income on the basis of generally accepted accounting principles (GAAP). That works out to an 11% profit margin. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) more than doubled year over year to $44 million. 

Looking ahead

Shares of SoFi have fallen hard, but they still trade at a fairly high valuation. The stock's recent price is 40.7 times the midpoint of management's adjusted EBITDA guidance range for 2022.

  2019 Actual 2020 Actual 2021 Actual 2022 Guidance
Adjusted net revenue $451 million $621 million $1.01 billion Between $1.517 billion and $1.522 billion
Adjusted EBITDA (loss) ($148 million) ($45 million) $30 million Between $115 million and $120 million

Data source: SoFi Technologies.

More than 40 times adjusted EBITDA seems like an outrageous multiple for a bank until you consider how quickly SoFi is growing its bottom line. As recently as 2020, the bank didn't even have any positive adjusted EBITDA to report.

In the third quarter, declining originations of student loans and mortgages were offset by soaring demand for personal loans. Before filling your portfolio with SoFi stock, it's important to realize that soaring interest rates could pressure SoFi's red-hot personal loan business, too. This stock is a screaming buy right now as long as you make it a relatively small part of a well-diversified portfolio.