Tech stocks are back with a vengeance this year after falling off a cliff in 2022. The Nasdaq 100 tech sector index is up a whopping 39% so far in 2023, leading the overall-market's rebound.

As with any average or index, some stocks are accounting for more growth than others. SoFi Technologies' (SOFI -1.88%) stock doubled this year, and there are plenty of reasons to be confident that it can go even higher.

Giving customers the services they need

There are so many fintech companies that provide similar services to SoFi, but the bank is differentiating itself in ways that resonate with its customer base. It offers an extensive suite of digital financial services on its website that are easy to use -- and charges low fees.

The company began as a student loan cooperative. You can still feel that low-key, consumer-oriented energy on its platform.

There were 584,000 new customers in the 2023 second quarter for a total of 6.2 million, a 44% increase over last year and an acceleration from the first quarter. There were close to 847,000 new products, a 43% increase, and evidence that the company's strategy to broaden its suite of products is working. Customers can get loans, make deposits in a bank account, invest, get credit cards, and more on SoFi's app.

Deposits increased by $2.7 billion to $12.7 billion, and 90% of those came from direct-deposit members. Management highlighted that metric because these deposits come from a high-quality cohort of customers with high credit scores. They fuel a cycle of healthy spending, which will lead to better business for SoFi.

It also limits the risk of default, makes for a lower cost of funding, and drives higher net interest margin. In the second quarter, net income was $63 million for SoFi Bank with a 17% net income margin. 

Total revenue increased 37% over last year, which is a slowdown from previous quarters. But it's happening at a time of economic volatility and high interest rates when people are hitting the pause button on borrowing, and defaults are rising, as a result.

SoFi's broad suite of products provide some hedging protection against severe economic shifts. While the loan moratorium is ongoing as the government looks for ways to ensure greater loan forgiveness, SoFi has diversified away from what was its original and core product. Financial services sales, the segment that encompasses most of the new products, increased 223% over last year in the second quarter.

In the lending segment, personal loans continued to drive the business, growing 51% over last year, while student loans were down 1% and home loans down 27%.

On its way to profitability

SoFi still isn't profitable but is making strong inroads toward positing net income. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 278% over last year to $77 million, and net loss improved from $96 million to $48 million.

In the high-growth financial services segment, contribution loss was $4.3 million, up from $54 million last year, and it posted positive variable profits. Management attributed the improvements to better monetization of its products, as well as operating leverage as it scales. And it's scaling quickly, which should lead to net profits soon.

Management reiterated that it's "well on track" to become net profitable by the 2023 fourth quarter.

Why did its price sink?

SoFi stock originally jumped after the report, but now it's down more than 8% from that jump. Investors could be worried that the price was getting too high for the performance.

At the current price, SoFi shares trade at less than 5x trailing-12-month sales. That's a reasonable valuation for a company with its growth rates that should become profitable in a few months. This means that there's still plenty of upside for SoFi stock.