Wondering whether you should invest in shares of SoFi Technologies (SOFI 4.44%) -- and whether this is a good time to do so? You're probably not alone. Given that the stock has more than tripled in value over the past year -- up 233% as of Oct. 2 -- it has drawn investor attention.
SoFi Technologies is a "fintech" company -- one involved in finance and technology. Specifically, it's a bank that aims to become a one-stop shop for consumers, permitting them to manage a wide range of financial matters from its multifaceted app. (My colleague Jennifer Sabil has predicted that it will become one of the largest U.S. banks within a decade.)
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In its own words, "Over 10.9 million members trust SoFi to borrow, save, spend, invest, and protect their money – all in one app – and get access to financial planners, exclusive experiences, and a thriving community." But wait -- there's more! "Fintechs, financial institutions, and brands use SoFi's technology platform Galileo to build and manage innovative financial solutions across 158.4 million global accounts."
The company is growing well. Its second-quarter report featured revenue up 44% year over year and member growth up 34% -- to 11.7 million. It has reached a recent market capitalization of $30 billion, and it's not hard to imagine it with a fatter value a decade from now.
If you think this is a great company and a great stock, you do need to make sure that it's trading at a reasonable valuation before jumping in. (Overpaying significantly for a great stock can result in lower gains or even losses.) A quick look reveals a recent price-to-sales ratio of 10 and a recent forward-looking price-to-earnings (P/E) ratio of 47. Both numbers are steep, so you might want to just add this promising stock to your watch list. Alternatively, perhaps build a position in it incrementally -- or just jump in, acknowledging the risk and aiming to hang on for many years.
