If you had bought shares of SoFi Technologies (SOFI 2.03%) a year ago, you'd be sitting pretty right now. The stock has more than doubled over the trailing-12-month period and has maintained its momentum, even amid this year's market volatility. It's always hard to predict how things will evolve in the short run. SoFi may or may not maintain its current run in the next few months. However, the company looks set to deliver above-average returns in the next decade. Here is why.
Strong financial results
Despite SoFi's strong performance over the past year, it hasn't followed a straight, northbound path. True, the company performed well in 2024. Revenue and member growth were strong; the company continued to expand its suite of financial products (including personal loans, credit cards, etc.), and, importantly, SoFi finally turned profitable last year. That's worth quite a bit in today's market. However, SoFi faced significant volatility in the early months of 2025, though that was hardly entirely due to its own shortcomings (in fairness, the company's guidance for the full fiscal year wasn't impressive). Investors are worried about the potential impact of economic hardships on its results.
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Trump's tariff policies could impact the economy and consumer behavior in ways that might harm the company's financial performance; for instance, it could lead to lower demand for various lending products. These things are hard to predict, especially considering the tariff situation is constantly changing and evolving. While other banking leaders may be affected in much the same ways, SoFi hasn't been profitable for long and carries higher-risk loans than more established banks, making it more susceptible to economic troubles and the elevated default risk that often accompanies them.
Despite these potential issues, SoFi has rebounded in the past few weeks after it reported strong first-quarter results. The company's revenue grew by a solid 20% year over year to $771.6 million. The company's net income based on generally accepted accounting principles (GAAP) decreased by 19% year over year to $71.1 million, but that was far ahead of its initial first-quarter guidance of $35 million at the midpoint. So, SoFi's GAAP earnings decrease was already priced into its stock price -- that's partly why the stock fell sharply after it announced its fourth-quarter results.
Meanwhile, the company ended the quarter with 10.9 million members, up 34% year over year, and 15.9 million products, an increase of 35% compared to the year-ago period.
NASDAQ: SOFI
Key Data Points
The long-term view
Part of SoFi's success so far is its modern flavor. The products it offers aren't particularly new or revolutionary. Legacy banks offer many of the same. However, SoFi is an online bank. It doesn't have a single retail location. It offers all its services digitally via the kind of sleek, vibrant, and engaging platform that we have grown accustomed to. Naturally, the data shows that younger people, including millennials and Gen Z, are more likely to rely partly or solely on digital banking than older generations.
In other words, the way we do banking is changing right beneath our feet, and SoFi is establishing itself as a leader in this new world order. The company will benefit as more young people transition into adulthood and begin their banking journey. The switch won't happen overnight. It is unlikely to be complete in 10 years. In other words, there is a powerful long-term tailwind here for SoFi, one that should excite investors. Additionally, there are several ways in which SoFi can grow its revenue and earnings. Let's consider two.
First, SoFi could cross-sell more products to its existing client base. With 15.9 million products and 10.9 million members, the company has an average of 1.5 products per member despite offering approximately a dozen to individuals through its lending and financial services platforms. Second, SoFi could add new products or expand existing ones, something it has done admirably over the years. In March, SoFi announced a two-year, $5 billion loan platform deal with Blue Owl Capital Management, an asset management company.
SoFi's role in this agreement is that of an intermediary: Blue Owl will finance the loans that originate through SoFi, which will steer pre-qualified borrowers toward Blue Owl. Of course, SoFi will earn fees for its trouble, though it won't get any interest income. This is the largest such deal SoFi has signed. Translation: As the company becomes a larger, more established bank, it will attract similar partnerships that will grant it significant revenue opportunities.
Now, SoFi will continue dealing with potential (and sometimes very real) economic issues. Even so, the company's growth potential and newfound profitability make it attractive for long-term investors. The stock could deliver incredible returns through 2035.
