Buying a new growth stock usually requires at least a small leap of faith. But while some come with a massive amount of risk, others demonstrate enough positive signs to inspire confidence and warrant serious consideration.

I was hesitant about SoFi Technologies (SOFI 2.25%) when it debuted in 2020. Its initial public offering (IPO) took place at the height of the bull market, and the share price went through the roof despite the fact that the company had no profits, few products, and little that differentiated it from the masses of other digital banks that were launching.

But SoFi has done a lot over the past three years to distinguish itself in terms of both what it offers consumers and how it runs its business. It's bigger and better, but also leaner, and it's closer to profitability. Its stock price is 65% below the peak it reached in 2021. And it's moving into new territory that could break open incredible opportunities.

SoFi's vision for the future

SoFi began as a student loan cooperative (hence its original name, "Social Finance"), and in 2012, it became the first company to offer refinancing on government and private student loans. But it has seized the opportunity in its target market of young postgrads and professionals and has branched out into a full financial services app that's easy to use. Since SoFi is all digital and recently acquired a bank charter, it also now offers bank accounts with high interest rates, and it charges low fees for its products.

The company launched SoFi Invest in 2019 to give this cohort a no-fee, fully digital experience with the ease of use it had come to expect, all available on a smartphone. More recently, it has participated in high-profile IPOs for companies such as Nu Holdings. It was the sole retail distributor for Rivian Automotive, and this year, Oddity Tech. Through this service, it gives its retail customers the opportunity to buy in at IPO prices. Now it's participating for the first time in underwriting an IPO for the forthcoming Instacart offering.

As much as this is new terrain for SoFi, it's CEO Anthony Noto's area of expertise. He's done an excellent job reaching into SoFi's core mission and activities, but he got his start in investment banking at Goldman Sachs before moving into the roles of chief financial officer and chief operating officer at Twitter.

So rather than moving into uncharted territory, Noto is steering the company into areas he knows well. Considering how well he understands and is implementing what SoFi is out to accomplish, the company is likely to blend these endeavors properly into the mix.

New ventures come with risk

SoFi is a consumer-facing financial services company that has achieved its success through a careful focus on delivering digital, consumer-centric services that appeal to its target market. Part of that involves offering new products and services that this market needs in an improved format. This strategy has led to high upsells and cross-sells, increasing membership, growing revenue, and improving profitability. Management said that it expects to reach net profitability by the end of this year.

This diversification strategy has also largely shielded it from the impact of the recently ended three-year pause in the repayments of student loans, which were previously central to its mission and operations. 

However, investment banking is a new step for SoFi. The purpose of becoming a retail distributor of stocks is to offer better products for its customers. Getting into underwriting ostensibly achieves the same purpose without assuming more risk. Investment banks, which typically underwrite stock distributions, offer IPO stocks to institutional and high-wealth clients. SoFi works with a different clientele.

The likelihood is that SoFi's investment banking activities will serve to democratize a system that has always worked to the benefit of high-net-worth and institutional investors. It is something to keep an eye on if you're interested in buying the stock.

What does it mean for SoFi stock?

I believe that SoFi can pull this off successfully without diluting its core mission; rather, it should be able to incorporate it into a fully loaded financial app for the individual customer. I think it's an exciting addition to the company's activities, and will lead to even more growth. 

SoFi stock is still up 90% this year, but it has fallen by 24% since the end of July. Shares trade at a price-to-sales ratio of 4.4, which looks like an opportunity for a stock with incredible potential.