SoFi Technologies (SOFI 4.03%) hasn't been an easy stock to own, with the price bouncing up and down. Case in point: Its 52-week high is 206% above its 52-week low. However, shares have soared 154% in the past 12 months (as of June 26). The market is warming up to this digital banking leader.
This fintech stock is extremely volatile, which might continue to be the case. But shares still trade well below $20. Should investors add SoFi to their portfolios at these levels?
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SoFi continues to innovate
SoFi has found tremendous success by focusing on providing a superior user experience to its customer base. This means leveraging data, technology, and the internet to make it extremely easy to manage one's finances. It helps that the business isn't bogged down by outdated infrastructure or physical bank branches. This makes it easy to put the customer first.
With that in mind, SoFi has prioritized constantly innovating. For instance, in March 2023, the company introduced FDIC insurance on up to $2 million in deposits by partnering with other financial institutions. This is eight times the standard $250,000 that's typically insured. SoFi's deposit base soared from $1.2 billion at the end of the first quarter of 2022 to $27.3 billion now, a phenomenal growth rate.
Recently, SoFi announced plans to tap the global remittance market. Later this year, customers will be able to use Zelle, ACH, stablecoins, or other methods to send money across borders. The business says that funds will be transferred via blockchain networks, and that the process will be cheaper and faster than the traditional systems widely used today.
After shutting down the service in December 2023 to comply with regulations, SoFi is reintroducing cryptocurrency trading on its platform. And there are plans to seriously expand the offerings down the road.
"Over time, SoFi intends to offer stablecoins and a wide range of other services, such as providing members the ability to borrow against their crypto assets, expanding payment options, and introducing new staking features, as well as blockchain and digital asset infrastructure capabilities for other companies offered by Galileo, SoFi's technology platform," the press release reads.
These planned initiatives should keep the growth engine rumbling. SoFi has a history of strong customer and revenue gains. I see no reason why that won't continue in the years ahead.
NASDAQ: SOFI
Key Data Points
SoFi is poised to be a huge winner
This stock has crushed the market in the past year, as momentum remains hot for SoFi among investors. But for those who have been on the sidelines, don't let that outperformance discourage you. I don't believe investors have missed the boat.
Executives think the bottom line is on an impressive upward trajectory. SoFi reported a $0.10 adjusted earnings per share (EPS) loss in 2023, a major improvement from the year before. But by 2026, the leadership team predicts positive $0.68 (at the midpoint). In the years after that, the forecast is for annualized growth of between 20% and 25%. The combination of rapid revenue gains and a scalable business model makes it easy to be bullish.
SoFi has exceeded Wall Street's EPS expectations in the last 11 straight quarters. Clearly, management has a history of under-promising and over-delivering. This gives me confidence that the company will hit its long-term profit targets, and maybe even surprise to the upside.
As of June 26, the stock trades at a P/E ratio of 39.8. On the surface, this obviously doesn't look like a bargain deal. After all, the S&P 500 index is about 40% cheaper. However, if you believe, like I do, that profits will increase substantially in the years ahead, then SoFi looks like a no-brainer buy below $20 per share.
