Digital bank SoFi Technologies (SOFI 1.82%) stock gained 26% in July, according to data provided by S&P Global Market Intelligence. The market celebrated some new launches and an excellent earnings report.
Better banking with digital
SoFi offers digital banking services, but it stands out in a few ways from what's an increasingly crowded market. It targets students and young professionals, and it has a large lending segment, since it started out as a student loan co-op.
It's growing quickly, and adjusted net revenue growth accelerated in the 2025 second quarter, increasing 44% year over year, its highest growth in two years. It was the second consecutive quarter with record add-ons, with 850,000 new members, a 34% increase over last year. Along with attracting new members, its strategy is to grow by cross-selling members new products, and it added 1.26 million new products in the quarter. SoFi has also become reliably profitable, and earnings per share (EPS) increased from $0.01 to $0.08 in the quarter.
Lower interest rates have become a strong growth driver for the lending segment, which was under pressure last year. Lending revenue increased 30% over last year in the second quarter, with a record $8.8 billion in originations. Personal loan originations increased 66%, and student loan originations were up 35%.
Its non-lending financial services segment is growing even faster, up 106% in the second quarter, along with a 241% increase in contribution profit, padding the bottom line. Management raised guidance after the report, and it should continue to enjoy growth across the board as interest rates stay lower.
Investors were also enthusiastic about the company's new products. In June, it announced the return of cryptocurrency trading and other blockchain-based products, and in July it said it would offer users investment opportunities in private funds from asset management companies Cashmere, Fundrise, and Liberty Street Advisors. These provide access to private companies like OpenAI, SpaceX, Epic Games, and others.
Image source: Getty Images.
Investing for the future
SoFi stock isn't off to a great start in August. It's down about 5% as investors moderate their expectations. It's also pricing in management's announcement that it would issue a new round of equity funding priced below the current market price.
SoFi is a growth stock, and it comes with some risk. It's also going to experience some setbacks as it climbs higher, and that shouldn't deter long-term investors who see the opportunity. However, it may not work for the most risk-averse investors.
