SoFi Technologies (SOFI 0.31%) stock fell 20% in March according to data provided by S&P Global Market Intelligence. The market's been in turmoil due to President Donald Trump's tariff plans, and riskier growth stocks typically bear the brunt of volatility when the market's in flux.
What's happening at SoFi
SoFi is an all-digital bank that's catching on with its core student and young professional target market. It's growing quickly, adding new members and more revenue, and the future looks bright.
As of the end of 2024, SoFi had 10.1 million members, a 34% year-over-year increase, and 14.7 million products, a 32% year-over-year increase. It's known for its lending segment, which is still its main category, accounting for more than half of total revenue last year, but not much more than half, and its other segments are growing faster. Non-lending segments, which include financial services and its business-to-business fintech platform, accounted for 49% of total revenue in the fourth quarter, up from 40% the year before. Financial services is on fire, with revenue up 88% in 2024. SoFi got a bank charter in 2022 when it acquired Golden Pacific Bancorp, and it now offers a large suite of financial services like bank accounts, investing tools, and more, and it differentiates itself by featuring innovative services like access to some initial public offerings (IPOs) and some alternative investment vehicles. Having a wider assortment of products helps keep members managing their money all on SoFi's app and increases engagement.
NASDAQ: SOFI
Key Data Points
It's also leading to higher profitability. Financial services segment contribution profit increased 358% in the fourth quarter year over year, while lending segment contribution profit was up only 9%. Lending profit was still much higher, at $246 million vs. $115 million. The increase in non-lending profit eases the pressure on the lending segment, which was volatile last year.
As SoFi captures more of a younger cohort, it has the opportunity to drive longer-term growth, and it's positioning itself to resonate with this category and maintain its high growth levels.
A chance to buy on the dip?
SoFi had a challenging 2024, but it navigated through the difficulty and ended the year on a high note. It doesn't have a long track record like the major banks, but it's shown that it can manage through adverse conditions successfully, winning market confidence.
However, it's still young and comes with more risk than the traditional bank, which is why it will get kicked down more quickly when the market is rough. At the current price, though, SoFi stock trades at a forward one-year P/E ratio of 26, which looks like a good entry point for anyone who has been on the fence and has an appetite for some risk.
