The market is absolutely flying this year after picking itself up from lows in April. It's up 13% year to date, and it's almost like the market has forgotten about what caused the downward action earlier in the year -- tariffs. Tariffs are still on the table and being implemented in different ways, and there are mixed signals in the economy.
SoFi Technologies (SOFI 4.00%) stock is helping lead the market forward. SoFi is an online bank that's attracting new customers at a rapid pace and demonstrating strength and innovation. SoFi stock is up 84% (as of Sept. 18) this year, but can it sustain these gains? Let's see where it might be in five years from now.
Image source: Getty Images.
Adding customers and cross-selling
SoFi is adding record numbers of customers to its platform. As companies get bigger, new customer count naturally slows down, but not here. In percentages, it's getting slightly lower as the base gets larger, but SoFi added 850,000 customers in the second quarter, topping the 2025 first-quarter number of 800,000, the previous record.
But SoFi makes money in any number of ways. It has a large, expanded platform with many different products and services, and as customers become acquainted with it, they buy new products. Chief Executive Officer Anthony Noto gave the example of bringing in a new customer through its free Relay product, which analyzes a user's finances and offers recommendations for cutting costs and investing the savings. A satisfied customer might then move their money to a SoFi savings account, which has a higher rate than the average large bank. If they choose direct deposit, they automatically get SoFi Plus membership and higher rates. With the extra money they have at the end of the year, they might open a SoFi Invest account. And so on.
In five years, SoFi is likely to have many more users. Its customer count has more than tripled since it went public more than four years ago, and although it may not be able to repeat that in five years, it's likely to keep growing quickly.
NASDAQ: SOFI
Key Data Points
Innovating with products
You might ask why investors should suppose SoFi can keep drawing new customers. The answer is that it offers an all-digital, easy-to-use platform that appeals to its demographic of students and young professionals. These users are just getting started in personal financial management, and as they get jobs and promotions, they need bank accounts and financial services. Ninety percent of its SoFi Money deposits are direct deposit, which means they're stable.
SoFi is leading in financial technology, and it's been consistent about offering new and innovative services that bring value to its customers. In the past, these have been products like access to private equity funds and initial public offerings (IPO), which are usually only available to institutional investors.
Recently, it made waves when it announced two of several planned launches related to cryptocurrency and the blockchain. It's bringing back cryptocurrency trading on its app, and its research points to users preferring to trade crypto assets with their bank, rather than a cryptocurrency platform. It followed that up with news that it will launch international money transfers directly in its app over a secure blockchain.
In five years, SoFi's platform will continue to expand as it offers new and valuable products and services, making it even more attractive to its target market.
Improving credit metrics
SoFi's original product was student loans, and lending is still its core business, although its non-lending segments accounted for the majority -- 55% -- of total adjusted net revenue in the second quarter. Non-lending revenue increased 74% from last year in the second quarter, driven by a 106% increase in the financial service segment, but lending revenue increased a healthy 32%.
As a young bank, with a young clientele, SoFi has had its share of concerning default rates. However, as interest rates come down, credit metrics have been improving. Its annualized charge-off rate for personal loans declined from 3.31% in the 2025 first quarter to 2.83% in the second quarter, and the on-balance sheet 90-day delinquency rate for personal loans decreased for the fifth consecutive quarter to 0.42%.
Look for metrics to continue improving during the next five years as the company has more data and experience in underwriting.
Expanding profits
SoFi has already passed the test of becoming profitable, and now it's building up its net income. It makes money in several ways, including fee-based products and net interest income on deposits. Adjusted net income increased 459% in the second quarter, and SoFi reported an 11% profit margin.
All of its three segments, which include lending, financial services, and tech platforms, are profitable, but financial services is growing the fastest, and its contribution profit increased 241% in the second quarter to $188 million.
In five years, I expect that trend to continue, but it could oscillate depending on the interest rate environment. As SoFi releases new products, the financial services segment is likely to account for a much larger share of total revenue and net income, which could mitigate some of the exposure to interest rates.
Creating value for shareholders
SoFi is capturing market share from the big banks, and there's every reason to envision it sustaining that trend. SoFi stock is up 350% during the past three years, and as it demonstrates more value for its users, it's likely to keep creating value for shareholders, too.
